U.S. telecommunications mission finds opportunities in India

A U.S. Executive Level Trade Mission to India reports that the country's telecommunications market is much bigger than expected and that India welcomes collaboration with U.S. firms.

The mission, which visited India during the spring, included eight leading American telecommunications firms that explored commercial opportunities for direct sales, joint ventures, and licensing agreements. Led by Assistant Secretary of Trade Development Charles E. Cobb Jr. (now Acting Under Secretary for Travel and Tourism), the mission was also joined by William F. Ryan, First Vice President and Vice Chairman of the U.S. Export-Import Bank, and by Lew W. Cramer, Commerce Deputy Assistant Secretary for Science and Electronics.

Industry participants included senior executives from AT&T, BellSouth International, Digital Photonics, Motorola, Multitech Systems, Om Electronics Systems, Omnitel and Tellabs International. Also on the delegation were the Regional Director of the U . S . Trade and Development Program, the Commerce Department India Desk Officer, and an industry specialist from the Department's Office of Telecommunications.

The goal of the mission was to identify gaps in India's domestic production of telecommunications equipment and services, market segments where U.S. technology could be most competitive while not challenging India's goal of indigenous development.

Officials from the Indian Govemment and private sector also expressed interest in American telecommunications products beyond those offered by the eight companies participating in the mission. The participants were overwhelmed by business proposals from Indian manufacturers and end-users. Delegation members held more than 300 meetings.

The group met with the key personnel responsible for India's massive telecommunications development program in New Delhi, Bangalore, and Bombay.

The size of the Indian telecommunications market exceeded their expectations. India plans to allocate about $40 billion to telecommunications infrastructure development over the next 12 years: $2-3 billion for 1988-90; $12-15 billion between 1990-1995; and $24 billion during 1995-2000. Since the telecommunications sector is generally profitable and self-financing, the delegation was told that almost 80 percent will be funded from within India, eliminating much of the need for concessionary financing after the next 12 years; 40 percent of this $40 billion requirement may be met through direct imports.

For the next seven years, however, India requires about $3.9 billion in loans. The U.S. Export-Import Bank emphasized that the United States would be highly competitive on loans for telecommunications exports, especially offers made by export credit agencies of other governments.

During the mission, Eximbank worked to finalize two $10 million credit facilities with the Export-Import Bank of India and the State Bank of India to finance U.S. contracts under $5 million. Vice Chairman Ryan also expressed keen interest in cooperating with the Govemment of India in providing Eximbank cofinancing with loans from the World Bank and the Asian Development Bank, which recently finalized a $135 million loan for telecommunications in India.

Assistant Secretary Cobb signed a Trade and Development Program (TDP, administered by the State Department) agreement with the Indian Department of Electronics. The agreement will fund a $265,000 software feasibility study for automating a water treatment plant, to be conducted by Texas Instruments. The mission also reached an agreement in principle with the Indian Department o Telecommunications to provide TDP funding for a telecommunications training project to be administered by the Telecommunications Training Institute.

Indian Government and private-sector officials listed several areas in which they desire collaboration with U.S. firms: transmission equipment in a variety of categories; digital multiplexers; network maintenance and operations support packages; line testing and maintenance equipment; jelly-filled coaxial cable; fiber optic transmission equipment and componentry; digital microwave systems; VF and multi-access radio communications with an emphasis on rural applications; payphones; and a range of data communications products such as modems and local area networks. India needs about 500,000 public payphones.

Assistant Secretary Cobb delivered a personal letter to the Indian Minister of State for Communications from Secretary of Commerce C. William Verity calling for increased trade and investment in the telecommunications sector. Despite the Indian Government's widespread calls for indigenous development, the Minister said that India welcomes foreign investment in the sector; he enthusiastically endorsed greater privatization of Indian's telecommunications production, Since the sector provides the Indian Government with a large positive revenue stream, he said the sector's development could be self-financing, eliminating the need for significant concessionary financing over the long run.

The group met with the leadership of the Department of Telecommunications and the Department of Electronics. Through working luncheons with the Confederation of Engineering Industry and the Indo-American Chamber of Commerce, participants had an opportunity to meet with more than 400 key Indian private sector representatives interested in telecommunications.

The mission visited the facilities of three Indian telecommunications R&D organizations. They also met with Mahanagar Telephone Nigam Ltd. (MTNL), the recently formed telephone operating company for New Delhi and Bombay, and the Indian Railways Board, which in the next few months will issue a global tender for a $1 billion upgrade of its telephone and data communications network.

The mission completed its tour with a stop in Bombay, where meetings were held with MTNL, Videsh Sanchar Nigam Ltd. (VSNL-providing intemational telecommunications services), and other state and private telecommunications organizations. VSNL provided the delegation with a procurement list of equipment needed over the next two years, including earth station antennas; echo cancelers; video conferencing units; high power amplifiers; wave guides; modulators; multiplexers; filters; companders; test instruments; line conditioners; and power supplies.

Asked for advice on how U.S. companies can best enter the Indian telecom market, an adviser to Prime Minister Gandhi said: "Bring in one or two products at no cost, try it out and take the media with you so that everyone knows it works. Talking to the top people can sometimes restrict the information flow, so prove your point to the public and mid-level technicians. Do performance studies yourself, rather than relying on us to do them for you. This will convince the public of what you have to offer. But first make sure nobody else is doing it indigenously within India. Don't use agents, your embassy people will do a better job for free. The system is already open and you don't need an agent to open doors. And work with either a government-owned company or a joint-sector (public-private owned) corporation."

In Bangalore, the trade mission toured the facilities of Texas Instruments, which maintains a 100 percent export-only software development center linked directly via satellite to London and Texas. Software can be written and tested in real time at a fraction of the cost in the United States. The delegation learned that Indian-produced software can provide a cost-effective alternative to U.S. designs. One of the many software projects discussed was converting telecommunications equipment from North American to European standards, readying U.S. exports for the Indian market.

The group also visited the manufacturing facilities of Indian Telephone Industries, the largest telecommunications producer on the subcontinent, and Bharat Electronics Ltd. , India's largest electronics defense contractor. Both these companies are located in Bangatore, India's center of high-technology manufacturing. The city presently hosts an estimated 75 percent of the country's manufacturing capacity in communications, computers, peripheral and electronic components, as well as other high-tech products.

The trade mission saw firsthand evidence in Bangalore that U.S. investment and collaboration in India's high-technology marketplace is both feasible and profitable. The United States is now India's largest trading partner, and in 1987 led all other countries in approved collaborations-joint ventures and technology transfer agreements. With 212 projects approved, the United States pushed ahead of Great Britain for the first time since 1957.

U. S.-Indian commercial relations are clearly broadening. To strengthen the climate for commercial ties, Prime Minister Gandhi and President Reagan signed a historic Trade Expansion Initiative agreement in September 1987 calling for increased Indo-U.S. trade and investment. The trade mission in the spring and an earlier mission last fall were followups to the initiative. The next major initiative is the Commerce Department's 1989 trade fair with the Confederation of Engineering Industry. Recruitment has begun for the "USA Partner Country Exhibition" at the 8th Indian International Engineering Trade Fair Feb. 19-26-the most ambitious export promotion activity ever taken by the United States in India. The Commerce Department already has contacted more than 25,000 U.S. firms about the fair, at which telecommunications is one of six highlighted industrial sectors. Interested firms should contact Jerry Morse at (202) 377-5907 or Terry Rettig at (202) 377-4466.

Despite the opportunities and growth in its telecommunications market, India is still a tough place to do business and U.S. firms face many challenges. By and large, India still takes a piecemeal approach to telecommunications development-bids are issued on a project-by-project basis. The decision-making process is bureaucratic and cumbersome, and problems remain with India's treatment of investment and intellectual property issues. Strict licensing rules control which companies will manufacture what products, at precise output levels and locations. Market entry and exit are strictly controlled with government protection for Indian companies that would otherwise fail. There are local content requirements for manufacturing, and a policy of discouraging technology imports in those areas where India i s-or hopes to become-self-sufficient, such as small digital switches and PBXs.

On the bright side, while U.S. export controls are frequently cited as a barrier to increased trade, the Commerce Department in fact approved 94 percent of all license applications in 1987 or a total of 3,916 valued at $536 million. Only 50 export licenses were denied. As a result of a Memorandum of Understanding between India and the United States, the number of license applications and approvals increased 500 percent between 1983 and 1984. Now that the new Indian Import Certificate procedure has been agreed to, the number of approvals should continue to increase.

U.S. firms also have several advantages over their foreign competitors when doing business in India: many Indian officials and technicians prefer U.S. equipment and technology, having worked and studied in the United States . . . there is no language barrier, making technical assistance and contract negotiation easier than with Japanese firms . . . U.S. technology has a reputation in India as the world's best . . . and the low value of the U.S. dollar relative to other foreign currencies makes U.S. companies more competitive on a price basis.

One participant made a sale during the trade mission and began the application procedure to manufacture its products near Bombay. Another received a letter of intent, a second finalized an ongoing collaboration agreement, while a third made arrangements for a group of Indian engineers to visit its U.S. plant for six weeks and collaborate on a software project. One other company already has begun producing modems in India, while a fifth was confident of establishing a permanent presence soon.

During the mission, AT&T announced it would be opening a permanent liaison office in New Delhi by September. All the participating companies promised to follow up immediately on leads.

Liberalized economic policy trends have encouraged firms to take an unprecedented interest in India, and U.S. companies have begun to make progress in the Indian telecommunications market in recent years. While India is not a place to go for quick sales or short-termi profits, the trade mission found it to be a market that rewards diligence, persistence and constant follow-up.

Although the U.S. fishing industry has been battling a trade deficit ever since the government began keeping balanceof-trade statistics, things are beginning to look brighter, at least for U.S. fish exporters, according to the Commerce Department's National Oceanic and Atmospheric Administration (NOAA).

Last year, the value of edible fish imports was at its highest ever-$5.7 billion. Exports also set a record. U.S. business sold $1.6 billion worth of seafood to overseas markets in 1987. This represents an increase of almost 48 million pounds in volume and more than $290 million in value from 1986.

Further fueling optimism are the trade figures for the first four months of this year. Sales through April were about $478 million, a remarkable jump of 48 percent over the same period in 1987. By contrast, fishery imports grew by only 4 percent in value in the first four months of 1988 compared to the same period in 1987, suggesting that the trade imbalance, while still large, is narrowing.

"We're on our way to breaking last year's export record," says Carmen Blondin, NOAA Special Associate for Trade and Coordinator of NOAA's participation in the Commerce Department's "EXPORT NOW" program.

Moreover, according to NOAA, the export success is broad-based, involving not just a few high-priced species, but virtually all fishery products. NOAA says the trade figures show the United States has increased exports to 20 of its 26 major fishery trading partners.

Japan continues to be the nation's biggest buyer, purchasing more than $290 million worth of fish so far in 1988, about 62 percent above last year's rate.

Thirty percent of the value of all seafood imported into the United States last year was shrimp, according to Terry Ellington, a Trade Specialist with the Fisheries Service in Washington, D.C. A record 478 million pounds of shrimp, worth $1.7 billion, were imported to the United States from more than 50 countries in 1987, considerably more than the 363 million pounds of shrimp U.S. fishermen caught. "There may not be much we can do to stem the flow of imports," Ellington says, "so it sure helps to increase our exports."

One way to expand exports is to encourage industry participation in the large food trade shows that take place in Europe and Asia each year, NOAA experts say. Seafood USA, an industry trade association based on the East Coast and supported in part by a grant from NOAA, has been bringing together American sellers and European buyers for several years. "Last year," says Kerry Muse, the association's Executive Director, "we had projected sales of $73 million, up from $36 million in 1986" at trade shows in Paris and Cologne.

Although the top export items at these shows tend to be traditional-Alaska pollock and salmon, for examplelately, Muse says, his association has had success offering nontraditional, high-priced items to the European market-squid, crab, and live lobster. "We practically introduced [American] lobster into the European market," he says, thanks in large part to air transportation, which makes relatively small shipments economical.

One export that doesn't get counted as such because the transaction takes place outside the U.S. customs territory is fish sold at sea directly to foreign processing vessels by American fishermen. Last year, for example, Americans sold 3.5 billion pounds of fish at sea to foreign processors, about one-third of the total U.S. harvest. The $214 million that joint-venture fish was worth-22 percent more than the figure for 1986-never gets counted as an export, but still represents a hefty infusion of foreign cash into the U.S. economy. Italy will put liberalized foreign exchange controls into effect Oct. 1. The new measures amend existing ceilings and deadlines, but make no major substantive changes in the controls.

The measures, authorized in a 1986 law, involve-among other things-the amount of foreign exchange Italians can hold, simplified documentation requirements, higher limits on the amount of lira Italians can carry when they travel abroad, regulations on Italians' purchases when they travel abroad, regulations on Italians' purchase of foreign securities, and higher limits on transfers abroad by international postal money orders.

The Italian Government will publish a single compilation of all existing exchange regulations Aug. 1. Two appointments in the International Economic Policy sector of the Commerce Department's international Trade Administration will take effect in August.

Richard L. Johnston, Jr., who has been Commercial Counselor in Beijing, China, for the past 2 1/2 years, will become Deputy Assistant Secretary for International Economic Policy Aug. 8. For the previous 12 years, Johnston was employed by the Chase Manhattan Bank in New York, Tokyo, Taipei, and Beijing, as Vice President and Manager for Credit and Marketing for the Asia/Pacific Division. He has BA and MA degrees from Princeton. He succeeds James P. Moore, Jr., now Assistant Secretary for Trade Development.

Roger D. Severance will become Deputy Assistant Secretary for East Asia and the Pacific Aug. 14. He has had 20 years of international trade experience in the State and Commerce Departments, including assignments as a Commercial Officer in Tokyo and New Delhi. He received a BA degree from Cornell University and an MBA from City University of New York. Severance succeeds Melvin W. Searls, who is going to India as a Commercial Counselor.

An Investors Forum in Manila Nov. 711, 1988 is intended to assist in translating the interest of U.S. and other foreign businesses into actual investment. The Forum is being organized by the Board of Investments in the Philippines.

The Forum will provide an opportunity for businesses from industrialized countries to capitalize on the Philippines' comparative advantage in relatively cheap but skilled Labor, in rich raw materials, in low-cost financing through debtequity swap arrangements, and in its strategic geographic location.

Details on the projects to be introduced at the Phillippine Investors Forum, as well as registration materials, will be available from: UNIDO Investment Promotion Service, Suite 215, 1660 L St., NW., Washington, D.C. 20036, tel. (202) 659-5165, telex 9102406649 IPS WSH, fax: (202) 659-7674.

Aug. 9-11-Detroit-The international Trade Institute, specialists in international trade documentation and education, will present three one-day workshops for importers and exporters on the Export Letter of Credit, Export Documentation, and Import Documentation. Other programs during the month of August are scheduled throughout the nation. Call 1-800543-2453. In Ohio call (513) 2765995.

Aug. 10-Baltimore-The port of Baltimore will host its first annual trade seminar on "Maryland-The Bridge to Changing International Markets." The one-day seminar will explore the challenges and opportunities that face the shipping community today. For information, call the Maryland Port Administration at (301) 333-4444.

Aug. 16-Cleveland-The ExportImport Bank of the United States and the U.S. Small Business Administration are offering a seminar on how small businesses can learn to access working capital for export sales. The workshop will cover the basics of using U.S. government programs that help exporters get the financing they need to export goods and services. The seminar will be repeated in Columbus on August 17 and in Cincinnati on August 18. Cost of the seminar is $8 5 . For more information or to register, call the International Trade Institute in Dayton at (513) 276-5995.

Aug. 17-Wichita-The Trade Development Division of the Kansas Department of Commerce is holding a seminar, the "Basics of Exporting." It is designed to address the most frequently encountered questions and considerations for those companies who have never exported or are relatively new to export marketing. The seminar will also be held in Salina on

Aug. 10, in Parson on Aug. 11, and in Garden City on Aug. 18. For more information and reservations, call Brenda Cowdin at (913) 296-4027.

Aug. 31-Cleveland-"Marketing and Manufacturing in the European Community Today and After 1992" is the topic of a special trade program that is being hosted by the Cleveland World Trade Association. Call (216) 621-3300 for more information.

Sept. 7-9-New Orleans-The National Marine Fisheries Service, the United States and Foreign Commercial Service, and the United States Regional Fisheries Development Foundations are sponsoring the fourth annual "Seafood Export Conference." The conference offers country market trends and outlooks, seminar and panel discussions, matchmaker business meetings, as well as social events. For more information concerning content, call Dr. Tapan Banerjee, Conference Coordinator, at (202) 377-3922. For more information on registration call Julie Snyder at (504) 589-6546.

Sept. 15-Hartford-The Hartford District Office is holding a lecture entitled "Essentials of Exporting" at the Hartford Graduate Center. Call Carl Jacobsen at (203) 240-3530.

Oct. 4-5-Washington, D.C.-The Institute for International Research, Inc. is sponsoring a conference on "Developing U.S. Business Opportunities in the Soviet Union." The event will be chaired by Arthur A. Hartman, former U.S. Ambassador to the Soviet Union, and will include over 40 speakers addressing issues such as growth markets, trade barriers, joint ventures, negotiations, industry opportunities , and legal and bureaucratic hurdles. Contact David Lippy at 800-345-8016. In New York, call (212) 883-2770.

Oct. 24-25-New Orleans-The U.S. Department of Energy and the Korea Institute of Energy and Resources are co-sponsoring a joint workshop on coal use and technology. Contact Kee H. Rhee at (412) 892-5721.

Oct. 25-27-Detroit-The Contract Manufacturers Association is sponsoring a series of seminars on the various aspects of outsourcing productivity as part of its fifth annual exposition. Contact Alex Day at (313) 643-6807.

Oct. 26-New York City-"The Future of Europe-Five Experts Look at the 1992 Liberalization of Insurance and Financial Services" will be the topic of a conference at the Pierre Hotel. Contact Brad Smith of the International Insurance Council at (202) 331-7222.

Oct. 27-New York City-"Going International: The S wedish-American Pannership" will introduce U.S. business leaders to Swedish government and industry representatives, including Sweden's Ambassador to the United States and the CEO of Electrolux. Sessions will include lectures on U.S.Swedish trade relations, case studies of Electrolux and the General Foods/ Gevalia partnership, and a panel on cultural differences in business. Contact Natasha Wolniansky at (212) 903-8102.

Nov. 10-12-Cosby, Tenn.-The 1st International Log Structures Conference will be hosted by the Log Home Guide for Builders and Buyers. Log builders from the United States, Canada, Norway, Sweden, Finland, Switzerland, and Japan will exchange ideas and technical skills, and discuss initiation of standards for log construction. For further information, call (615) 487-2256.

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