(In an exclusive interview with SME Times recent issue, Demetrios Marantis, US Deputy Trade Representative, said that US is seeking new areas of collaboration, such as the development of links between Small and Medium Enterprises (SMEs) in both countries. We reproduce the excerpts of the interview for the benefit of our readers. – Editor)

Demetrios Marantis, US Deputy Trade Representative is optimistic that bilateral trade between India and the United States will improve now that signs show that the peak of the recession may be “behind us”. The US-India commercial relationship, he added, is the strongest it has ever been. Excerpts of the interview:

SME Times: Trade relation between US and India has come down drastically due to the global recession. What is your reaction on this?
Demetrios Marantis: The signs show that the peak of the recession may be behind us, and it is our hope that bilateral trade, too, will improve.

Do you sense any kind of improvement in Indo-US trade relation?

Demetrios Marantis: Definitely. The US-India commercial relationship is the strongest it has ever been.

SME Times: Do you feel the US-India Trade would double in the next five years from the present US$ 44 Million?

DM: It is very possible. Given the synergies between US and Indian companies, and the strength of our government to government interaction, this target is achievable.

SME Times: Can we except any FTA between India and the US in future?

DM:  It is our hope that the strength of our bilateral relationship will set into place a foundation for greater trade integration.

SME Times: Which are the key sectors that can have huge investment between India & US?
DM: There are numerous opportunities in all sectors. Defense trade, higher education, infrastructure, and innovative science are just a few examples of the potential for US-India collaboration when given the right opportunity.

SME Times: Is there any driver for the rapid recovery of US economy. Will the President Obama’s administration put the economy back on track?

DM: President Obama has made the recovery of the U.S. economy his number-one priority, and has said in recent days that the worst of the recession may well be behind us.  It will take continued hard work at home and international cooperation – including a commitment to a robust, vibrant, rules-based trading system – to continue to advance economic recovery around the world.

SME Times: Small businesses are the backbone of the U.S. economy, and the primary source of jobs for Americans. What initiative that the US government is taking in order to remove barriers in Indo-US trading system?

DM: The Indo-US Trade Policy Forum is our main bilateral mechanism for discussing trade and investment issues. The two governments are working to overcome impediments to trade and investment, and we are seeking new areas of collaboration, such as the development of links between SMEs in both countries. However, there is an ongoing discussion on a bilateral investment treaty between India and US which aims to ease inflow of capital between both the countries. In this context, US has asked India to give pre-establishment national treatment status for investments made by the US companies where they (US companies) do not have to go through any screening process undertaken by Indian government agencies such as the inter-ministerial Foreign Investment Promotion Board.

SME Times: The World Trade Report 2009 has also suggested that global business may shrink by an unprecedented 10 percent this year. What do you suggest? Are the United States and India ready to re-launch efforts to reach a new global trade deal under the Doha negotiations?

DMs: The US is committed to a balanced and ambitious conclusion to the Doha round, with a meaningful market access outcome for all involved.  Ambassador Ron Kirk has been very clear that the United States is ready to move forward with both multilateral and bilateral discussions – including with India - toward that end.

SME Times: What is the future of Doha talks? What is the reason of the collapse of Doha talks after coming very close to an agreement?

DM: Moving Doha forward to a successful conclusion is a matter of bringing new creativity to the multilateral process and having sustained bilateral engagement take place among key players, such as the United States and India, in order to move the negotiations into the endgame as soon as possible.

(The Reserve Bank of India had constituted a Task Force to look into the problems faced by the diamond industry in Gujarat and suggests suitable remedial measures. Gujarat is the hub of India’s diamond industry. Thousands of small diamond cutting and polishing units are located in and around Surat and these have facing acute distress in the wake of global melt down. The Task force included officials of the Gujarat Government, State Level Bankers’ Committee Convener (SLBC) for Gujarat (Dena Bank) and other bankers. Following are the proposals of the Task Force. – Editor)

The Reserve Bank of India has suggested expeditious restructuring of the existing borrowal accounts of diamond units, financing diamond sector units not financed earlier, re-training / re-skilling / rehabilitation of displaced diamond workers and providing financial relief to diamond workers in order to get the industry out of the current slump.
RBI has issued detailed guidelines for suitable restructuring of borrowal accounts of the diamond units. Banks will take suitable measures to expeditiously release the benefits of restructuring, an RBI release said.
The RBI directive follows recommen-dations of a task force that look into the problems faced by the diamond Industry in Gujarat. In order to enhance the liquidity support to the industry, banks will examine the scope for lending against stock of polished diamonds held by units in their inventory.
The RBI has suggested to banks that they may consider proposals for credit support to new diamond sector enterprises, which will generate employment for the workers. Banks may also explore the possibility of financing procurement of rough diamonds from reputed agencies for cutting and polishing, to maximise employment of workers, it said.
Suitable training programmes will be organised at district level by the district administration to train dis-placed diamond workers for alternative employment. The district authorities may also identify and sponsor all eligible workers for appropriate financial assistance / loans under various government schemes.
With a view to helping the diamond sector workers to tide over the distress caused to them on account of loss of jobs/work, soft loans with elongated repayment cycle will have to be considered, based on their identification by their employers.
The diamond sector units will, how-ever, have to sponsor such workers to the banking system. Banks may consider rescheduling of existing housing, educational and personal loans of diamond workers on a case to case basis. Small monetary limits may be considered by banks for workers through General Credit Cards (GCCs), with relaxations, as may be appropriate.
An education fund will have to be constituted to help payment of school fees of children of displaced diamond sector workers. The recommen-dations were made on the basis of detailed discussions the members of the task force had with various associations of the diamond industry and the Diamond Workers’ Union in Surat.
The task force has estimated that about one lakh workers can be trained in a year’s time in such a module. The trainees will need a stipend for their subsistence. Necessary financial support for organising the training will have to be provided by the state government.
The Task Force has also recommen-ded a request for interest rate subversion on export credit at four per cent over the prevailing 2 per cent. As regards the provision to extend credit support to new diamond enterprises which have the potential to generate employment opportunities for the displaced workers, it has said that banks will have the power to consider any such proposal for the quick release of finance as per the guidelines.
The Task Force has also asked banks to explore the possibility of financing the procurement of rough diamonds from reputed agencies, for cutting and polishing, on a labour-intensive scale, to maximise the employment opportunities.
It has asked the district authorities to quickly identify and sponsor all eligible workers for appropriate financial assistance under various government schemes for alternative work, wherever necessary, with suitable relaxation in norms, as a one-time dispensation.
The Task Force has also suggested special kinds of credit cards for the workers. The General Credit Cards (GCC) with small monetary limits could be considered for the diamond workers, with relaxation in norms,
it said.
Banks have also been asked to consider rescheduling of existing housing, educational and personal loans of diamond workers on a case-to-case basis. The report has also called for setting up an educational fund at the initiative of the district administration, with contributions from diamond industry, local industry associations and philanthropists, to help pay the school fees of children of displaced diamond workers.

Prof. K. Rajasekharan conducting Programme on “Foreign Exchange and Risk Management” at AMA