Obama Visit to Boost Business Ties, Say Top CEOs

US President Barack Obama's visit to India for Republic Day celebrations has created a buzz. NDTV spoke to some of the top CEOs gathered at Davos to attend the annual World Economic Forum meet on what they expect from the visit.

David M Rubenstein of The Carlyle Group, Stephen G Pagliuca of Bain Capital, Sunil Mittal of Bharti Enterprises, David W MacLennan of Cargill and Harvard University Professor Kenneth Rogoff took part in the discussion.

Here's an edited transcript of this discussion:

Question (to David M Rubenstein): What do you think should be on the agenda right now in Indo-US relations and what is it that you think the US President should keep in mind?

David M Rubenstein: You all remember a few years ago President Obama said he wanted the pivot to Asia but he didn't do as much in Asia as he probably intended to do and now, I believe he wants to spend much more time in Asia, particularly in China and India, and so he really wants to strengthen relations between the two governments. I think he enjoyed meeting with Mr Modi. The Prime Minister came to the United States and wants to reciprocate so I expect there will be a very good exchange between the two of them.

Question: Do you think India is more on the agenda now than it perhaps was in the last 5 or 6 years?

David M Rubenstein: Absolutely, I think the Prime Minister has made it clear he wants to encourage more direct investments in India. And many foreign direct investment companies are quite interested in investing their money in India and I think our company is one of them. So I think it will be a very fruitful exchange between the two of them and I think they have a very good personal relationship.

Stephen G Pagliuca: You know I think half the foreign investment in India is from private equity so I think it's a very important discussion. I spoke to John Kerry last week. He was advising the President and was very excited about this visit. We do about a $100 billion in trade with India right now so I think there's always all sorts of things we can do from a trading perspective, from freeing up some investments to go into India and build some infrastructure. It's a very exciting time.

Kenneth Rogoff: Well I want to point out that here in Davos, India and the United States are sort of the two economies everyone's talking up in the places they are doing well. So naturally, the meeting, I think, reinforces that. Surely, President Obama is very interested in what the Indian government is doing in its reforms which are very directed towards foreign investments in bringing in foreign investments. So I think they'll have a lot to talk about.

Question (to Kenneth Rogoff): You were saying in one of the sessions that if you look at it, it's not gloom and doom everywhere. The United States not doing badly. India not doing badly and therefore that gives a certain importance to this meeting.

Kenneth Rogoff: Absolutely. I think it's a good moment for the two of them to be appearing together because they're doing well and not many other countries are doing as well.

Question (to Sunil Mittal): We have been seeing a reasonable amount of gloom about India at the last three or four Davos meetings, that India lost the plot in the India story. Do you see a different mood leading up to this Obama visit?

Sunil Mittal: Yes, it's a very different mood. India is being talked about. Sessions are full up of the ministers. They are very heavily committed. I think you've heard from the three big investors of potential policy players in the world. To talk very positively about India, I think the visit that is coming up next week is coming in the backdrop of a very good mood in India. (There's) very high levels of interest from the US. Having said that, I think the level needs to be stepped up significantly. Secretary Kerry last week mentioned that FDI from the US is an impressive $36 billion. I personally believe it should be $360 billion. $36 billion for a US-India engagement is rather modest.

Question (to David W MacLennan): You may get a chance to meet Mr Modi. If so, what would be the sort of things you'd like to say to him?

David W MacLennan: Well just to be clear, I had breakfast with him in September so I won't be at breakfast this week. But nonetheless, I was part of a group in September during the UN meetings and I had a chance to meet him. I find him very impressive. He is straight talker. He is very supportive of business and the question I asked him in the statement I made was, 'Help us be more efficient in terms of being an ag and food business in India.' Right now, when we develop new products, new innovations for food, it takes up over a year to get it approved and it simply takes longer for us to get it to the market, to the consumers. So a key point for us is: 'Help eliminate the bureaucracy, help speed the market for a company like Cargill.'

Question (to Mr MacLennan): And what did he say?

David W MacLennan: He said he was supportive of doing that. He understood it. He seemed to quickly resonate to the points that were made at the breakfast by myself, David was there and others. But my sense was he wants to help India's economy. He wants to help the consumer and that he will do whatever it takes to help a company like ours to succeed and thrive.

David M Rubenstein: Let me just say I was in that breakfast and most heads of state and prime ministers, they give their little speech and they maybe listen to it for a minute and they go. He let every single person give their little presentation and he responded to every point that everybody gave. So he was obviously well-informed and obviously, he knows what he's talking about. In the private equity world, one thing that I try to encourage is to have a larger indigenous private equity. China has a very large private equity industry. In India it's not that large. One of the reasons is: that Insurance companies and Pension funds cannot invest in private equity in India, I hope that change can be made so that more people can benefit from what private equity can do in India.

Question (to Rubenstein): Anything that you said in the breakfast in addition to what we just heard?

David M Rubenstein: We all said that we had thought encouraging more FDI was good and that his openness was quite welcome as there aren't that many Indian prime ministers who were as familiar with our business as he was. So we were all impressed and I think he left New York and Washington with a lot of new supporters and friends.

Question: What to your mind (to everyone) are the key issues, in economy and otherwise as well?

Kenneth Rogoff: Obviously corruption is a problem in India in doing business there. And he's had some innovations in that in having more online license registrations, trying to end around some of that.

Stephen G Pagliuca: I think the speed at which disputes get judged is very important. It sometimes takes four years. It has got to be faster. Also employment rules, India has employment where you have to get approval from the government if you have over a hundred people and I think they've raised that to 300 now but that limit should probably be raised again to make employment more robust.

David Rubenstein: Well I think we're recognising in the United States that we in our country where we are 317 million people and getting that country to do any one thing isn't easy. Getting a country with 1.3 billion to do anything is not that easy. So it's not a modest task that he has in front of him.

David W MacLennan: I wouldn't say what has gone wrong. But what could go better. For example in the agriculture and farming industry, there are restrictions on who farmers can sell their products to. The middleperson if you will. And so it adds cost. It adds time. So anything that can be done to modernise restrictions laws, policy and as such as that. There are also restrictions on storing grain and I understand the backdrop of it. The relative to food security but nonetheless the efficiency of allowing companies like Cargill to closer to the farmer and simplify and make more efficient the supply chain. That will make the business and agri-economy better.

Question (to Sunil Mittal): We have heard a lot from the government and now we are starting to see some action. On the ordinances that have come, 10-11 of them. Talk about raining in tax terrorism and stuff like that. Are you satisfied with the action we have seen or is it a long process that we are going to see?

Sunil Mittal: No I think there's been a fundamental shift in the attitude of the government. They are not only in the same time pro-business but also believe in the social programms in the same time but not at the cost of business. So FDI opening up. Some of the real matters for the US. Insurance is done through the ordinance. It will go through, hopefully the upper house or through the joint sessions. Defence is done to 49 per cent and the only point that remains is the multi brand retail such as Walmart could come into India and that can be debated as we go forward. The e-commerce is an area where a lot of foreign investment has come through is a flashpoint which has been building up a lot of debate. And opening up to 49 per cent in multi-brand retail should also be a possibility. Then to the issue of food and agriculture and evolution of APMC Act. That's what he has been referring to here where large companies can't go the farmers directly is being handled decisively seeing something to incentivize to dismantle the APMC Act and some states have gone ahead and that. I believe these are very early signs of the government's determination to do things but a lot more is coming.

Stephen G Pagliuca: There are a lot of advantages in India, Firstly, oil is cheaper in India. Second, very bright population very educated population. It really should take off if you can get some of these reforms through.

Question: And the drop of oil, which people are expressing concerns about and the impact of that in countries like Russia and Brazil, for India it's one of the best news possible?

Stephen G Pagliuca: Great piece of news for India (oil price slump) and if Modi can get these reforms through, there could be a real rennaisance in business there because you have all the ingredients for it too - smart population, demand. You have one of the world's largest economies. (It) could be really exciting.

David M Rubenstein: India is now importing 75 per cent of the oil consumed. So it is really helpful but also the currency is important. The currency has gone down against the dollar for many many years and as a result. It hasn't been as attractive to investors who make money by investing in India but then have to bring it back. Now that the currency has stabilised a bit and come up against the dollar, I think it's much more helpful.

Question: In the last few years at Davos, people have been finding very difficult to deal with are policy of flip flops- retrospective taxation, some of the tax stuff that's happening and regulations changing around. That leads to an uncertainty bad for business. Is that something that you think is being addressed?

David W MacLennan: Yes. Very simply which is to say that every indication is Prime Minister Modi is going to create certainty. He's going to break down the barriers. He's going to address the policy that make it difficult to do business and like in any country you're willing to bet, you're willing to invest more if you feel there's a level of reliability to the government into policies that are coming. So it's not so much waiting for things to change. I'm saying there's a directionality that gives me confidence that will bring more money into the country.

Question: Finance Minister Arun Jaitley is speaking here in Davos. Is the question of tax terrorism and regulatory uncertainty one of the those you'd like to see him address as well?

Sunil Mittal: I think he's been continually doing so. There was a big business summit last week. He made a big point there as well. I think this government is very clear. The world should get comfortable with the Indian Tax Regime.

Question: But it needs to a stable, non-adversarial tax regime?

Sunil Mittal: Predictable, sustainable and non-adversarial tax regime. I think that's something that this government has committed. And the Prime Minister has made it very clear. He wants to take ease of doing business in India from144 to 50 in less than a year. I mean all these things can only happen if the tax pieces are sorted out. Investment pieces are sorted out. I think there's every sign of him being very very determined.

Question: When we come back to those questions of regulatory uncertainty and uncertainty in general, there's one major issue of course that all this has to go through parliament and there's a grid lock in the US and grid lock in India as well. Parliament has been stuck for a while. What do you think about that?

David Rubenstein: I think the President of the United States will probably say to the Prime Minister. He wishes he controlled his congress as much as Mr Modi controls his Parliament.

Question: Only the lower house?

David Rubenstein: Well he has much greater influence now in his Parliament than his predecessors did and he can get some things through. The President is obviously facing Republican control in both houses and the senate. So he is going to spend more time looking at things at abroad probably because getting Congress to agree with things is not going to be easy.

David W MacLennan: I agree. The key is going to be to get stability. And let business know what the rules are and when that happens I think you can get a real positive effect for India.

Question: Let's look at the broader issues. There are other issues rather than just the economics of it. Obviously both sides are talking about the fact that India and the US are natural allies. Obviously irritants as well have been dealt with like the WTO issue, which was dealt with. Other issues still remain such as geo-politics. Or are they sorted out?

Kenneth Rogoff: Of course they can be sorted out. The US is trying to be diplomatic. Trying to be each other's friends and some people are not friends with each other. India of course is a stable Democracy. It's a natural ally and the US has a habit of taking countries for granted. You can look at Latin America often complaining about that. I'm glad President Obama's paying more attention. I'm glad he is giving it more weight because at the end of the day. India's by far the largest these countries, the third largest economy in Asia and I think it's really important.

Sunil Mittal: If I may add, my own view has always been why US doesn't engage with India on a significant level. They are natural partners, I think even in the previous government we saw the impasse on the Nuclear Issue getting resolved and there was a hope that it would move up. And I'm saying there was a big hope. The US must entirely engage with India in a big way. China was almost created out of the US, manufacturing bases being transferred there, I think it's time for US to start looking at India in a very very new and open way.

Stephen G Pagliuca: You know the world's going bilateral in a lot of cases and so I think they can keep those issues to the side but I agree that there is so much synergy between India and the US. China was created by the things you were talking about and I'm hopeful that we focus on those bilateral issues and get the trade going and it will be a great partnership.

Question: How does China play out in all of this? On both sides of the US and in India, there's some waryness about China. But the US has invested so much in China. So in other words, do you think India is anywhere close to that level?

David W MacLennan: I think not in the short term. It's going to take a while to catch up and being in China and being in India are not mutually exclusive but the Chinese have done a good job in terms of their infrastructure and being supportive of business and India still has some ways to go. Ultimately, they will converge but it's going to be a while.

David Rubenstein: China and the US is probably the most important relationship in the world because they are the two biggest economic powers and I don't think that's going to change anytime soon. India can become more of a significant relationship with the US than it has been.

David Rubenstein: I think the fact the Prime Minister (Modi) seems much more open to having a close relationship to the United States is a major factor. Of course you're going to have to wait a while for the results to deliver but I think people are going to give him the benefit of doubt.

Stephen G Pagliuca: India is a large country - four times the size of the United States in people. So nothing changes overnight but the signs are very positive and you get some tipping point if you keep going in that direction will be great.

Kenneth Rogoff: I think implementation is important. We were on a honey moon period still but only time will tell.

Stephen G Pagliuca: Small things like right now you have instant visas and you didn't have that even 6 months ago. It can help tourism. If it takes you 2 weeks to get a Visa to go to a country, you'll probably go to a different country. So it's fantastic now you get an instant Visa and land in Delhi or Mumbai.

Sunil Mittal: Electronic hardware manufacturing, 'Make in India' that particular piece... The US needs to start manufacturing in India as well whether it's the semi-conductor pieces....

David W MacLennan: I agree with the fact that President Obama's going there. I think it's about time a country of 1.2 billion people needs to have more attention from our country so I think it's a positive first step and we all know India does a great job of technology outsourcing and let's make India known for other industry such as agriculture and food.