US President Barack Obama was recently in India at the country’s Republic Day celebrations on January 26, but as expected, he and Indian Prime Minister Narendra Modi discussed and announced new business initiatives for the two nations.
Renewable energy, infrastructure development including rails and ports, American exports to India, nuclear energy and defense were some of the focus areas of the talks held between the two leaders and their respective trade delegations. The US President made it clear during many points in his visit that US companies want to help India in its pursuit of clean energy sources.
By the end of the three-day visit, the US President had announced $4 billion in new initiatives to help improve trade and investment between the US and India.
The centerpiece of the new programs was the $2 billion of leveraged financing for renewable energy investments in India through the US Trade & Development Agency. India, of late, has been quite bullish on renewable energy as reported by MetalMiner.
Another $1 billion would come as loans for small and medium-sized businesses across rural India through the Overseas Private Investment Corporation (OPIC). The US Export Import Bank would, on the other hand, finance a billion dollars to support “Made in America” exports to India over the next two years. There will soon be two US trade missions in India with a focus on infrastructure development in rail, roads, ports and airports, Obama said.
Both leaders also agreed to a revive a 10-year-old defense agreement to co-produce military equipment, striking deals on cooperation that included joint production of drone aircraft and equipment for Lockheed Martin Corp.’s C-130 military transport plane.
Left unspoken in all of this is the fact that these agreements mean a huge influx of metals including steel and aluminum as India goes about implementing dream programs like the bullet train service. Indian metals companies, of course, have hailed the announcements as they hopes cash comes in and increases production even further to meet the anticipated demand. India’s fledging solar energy sector, too, is enthused, going by the initial reactions coming in.
The highpoint of the visit, though, was the “breakthrough” achieved on finalizing the Indo-US civil nuclear cooperation program, stuck in limbo for about 6 years. The “step-ahead” announced in a joint press conference by the two leaders, has sparked off a public debate in India since there was no explanation forthcoming on the terms of this new understanding nor the factors that led to the so-called breakthrough.
India has planned a $182 billion expansion of its nuclear industry to produce electricity in the coming years, as a large part of the country gets no or intermittent power supply.
Both parties acknowledged having “worked around” the nuclear liability insurance bit, but since nothing much was forthcoming on how, even at subsequent government media briefings, much was left to conjecture. Under the plan, Indian insurance company GIC and four other Indian state companies would contribute about $122 million to the pool and the government would pay an equal sum. The fund will manage the immediate costs arising from any nuclear accident to the reactor suppliers, in this case, American companies such as Westinghouse and General Electric.
The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.