India-U.S. Economic Relations
(Continued from page 7)

India’s energy sector has been an attractive destina-
tion for US investments. The sector offers for exploi-
tation a vast untapped potential in hydro electricity,
oil & natural gas, and coal. Although several U.S.
companies have been looking at the Indian energy
market closely, progress has so far been limited,
given the gradual opening up of the sector. The
government of India has, however, now simplified
considerably the norms for entering into the explo-
ration activities, generation, transmission and distri-
bution of power, and captive coal mining & process-
ing. Considering the vast demand and supply gap in
the energy sector in India, there is a tremendous
potential here for economic cooperation between
the two countries.

During President Clinton’s visit to India, the two
countries signed a joint statement on cooperation on
energy and environment issues, outlining a common
agenda on clean energy development and environ-
mental protection. Subsequently, a Joint Consulta-
tive Group on Clean Energy and Environment was
set up, which met in Washington, DC in July. The
Group looked at possible collaborative projects to
develop and implement clean energy technologies
with public and private sector investment. Another
key area of bilateral cooperation is renewable en-
ergy. During President Clinton's visit, an MOU was
signed between the Indian Ministry of Non-Conven-
tional Energy Sources and the United States Depart-
ment of Energy.

India's Telecommunication sector, already a major
recipient of U.S. investment, is expected to continue
to provide substantial opportunities to U.S. inves-
tors. Though the telecommunications industry has
been growing over 20% for the past few years, India
has a tele density of only 2.7%. Over the next de-
cade, more than 175 million lines are required to
meet the demand of basic telecom service in India.
This translates into an investment requirement of
U.S. $70 billion in the basic services alone. Apart
from the basic service segment, India has a sub-
scriber base of nearly 1.6 million in cellular phone
industry, 0.8 million in radio paging and 1.4 million
in Internet services. These segments are growing at
an average growth rate of over 50 % for the past
few year. With the objective of achieving tele-den-
sity of 7 by 2005 and 15 by 2010, Government of
india has ushered in several new measures to pro-
mote investment through greater private sector par-
ticipation in this sector.

These measures include:

e Announcement of the New Telecom Policy 1999
(NTP)

Simplification of the revenue sharing arrangements
e Streamlining of the functioning of Telecom Regu-
latory Authority of India (TRAI)

Establishment of a separate Telecom Disputes
Settlement and Appellate Tribunal (TDSAT)
Introduction of new provisions for infrastructure
sharing by telecom service providers/public utili-
ties

Opening of the national long distance services to
private service providers

Proposed opening of international long distance
services by 2004

The government has also introduced a liberal policy
for Internet Service Providers (ISP), which puts no
restriction on number of internet service providers,
imposes no license fee for the first five years and
allows ISPs to set up their own gateways. Keeping in
view the rapid convergence of telecom, Internet and
entertainment, a new comprehensive statute, to re-
place the Indian Telegraph Act (1885) is under way.
The draft Convergence Bill envisages setting up of
an independent carriage and content bureau apart
from the office of the spectrum manager to bring the
regulatory framework for all these services beneath
one umbrella.

Another area where closer economic ties can yield
mutual benefits is the infrastructure sector. The Gov-
ernment of India is continuously reviewing its poli-
cies to create an investor friendly environment in
sectors such as roads, ports and airports. Private
sector participation in Build, Operate and Transfer
(BOT) projects, greenfield airports and terminals and
shipping berths and capacity augmentation has been
initiated.

Institutionalizing the growing economic ties

The ‘Vision Statement’ signed by the Prime Minister
Vajpayee and President Clinton envisions a broader
dialogue between the two countries on economic
policy issues. Pursuant to this objective, Mr. Yash-
want Sinha, Finance Minister of India and Mr.
Lawrence Summers, U.S. Treasury Secretary, signed
an agreement in April 2000 to set up the India-
United States Financial and Economic Forum. The
objective of the Forum is to strengthen the financial
and economic relationship between the two coun-
tries through regular government-to-government
meetings of the economic policy makers.

See INDIA-U.S. ECONOMIC RELATIONS, Page 15
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