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India set to announce big FDI into America
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Robinder Nath Sachdev | 21 Sep, 2019
Your author is going out on the proverbial limb. Bricks are mine to
take, and if things pan out as analysed below, then the bouquets are
welcome.
On Sunday, September 22, US President Donald Trump and
Prime Minister Narendra Modi will meet twice in Houston. One meet-up
between the two leaders shall be at an event hosted by the
Indian-American community, with over 50,000 in audience where both Modi
and Trump will be jointly present, and both shall address. The other
meet-up will be a Modi-Trump summit.
Let us speculate about the
outcomes of these two meetings in Houston. Both are smart leaders. Both
know optics and choreography, emotions, economics. Both also know that
after their summit at Houston, publics and media will demand to know
what they both accomplished for their each country.
So, if both
are meeting in Houston, then what are the tangible outcomes that they
can announce that are impressive for audiences in the US, and in India?
For a moment, forget about global issues. The Houston meets will be only
about the bilateral US-India relationship. The various other global,
counter-terror, and such will be kept for the New York bilateral which
will happen just days subsequently. Your author shall write on that
later.
So, at Houston, what will be a big announcement that
should be good for America? Elementary, Watson. It will be an
announcement that India, or in fact some Indian company, will do an FDI,
invest a few billions of dollars into the US, or into an American
company.
This will serve dual interests -- India will secure
energy security, of oil or gas supplies, at fixed rates, for the long
term. And, Trump, will be able to tout to his American audiences that
his international trade policies have been effective, and that he has
been able to bring in US$ x billions into the US economy -- from a
rising economy like India.
Why this deal? Again, elementary,
Watson. India needs oil and gas. American oil and gas delivery on Indian
shores is almost competitive now in terms of global prices. Given the
variety of uncertainties in the oil and gas supply to India, including
the latest drone attack that has crippled half of Saudi Arabia
production, India must lock in a safe, predictable supply of oil and gas
for the next 20-30 years. The United States will step up as a reliable
supplier.
In this era of risk management of the supply-chains,
therefore, why not India seal a deal with the US, for a long-term
supply, especially now, when the US is surplus with oil, gas, shale --
and the American fossil fuel industry is hungry for international
markets?
A long-term contract, hedging the risks, sounds logical
for India. Makes sense for America. India needs to lock in energy
security -- fossil fuel based. Will also be good for the United States,
and for Trump. If an announcement of a few billion dollars investment
into the US economy is made by an Indian entity, it will help Trump to
tell the American public that he is attracting FDI, investments, and
creation of jobs in the US.
Technically speaking the Indian FDI
into America may be made by one of India's top oil and gas companies, in
the public sector, say, an ONGC Videsh, or GAIL, or a private sector
company like a Petronet. There are already reports that Indian gas
importer Petronet LNG has signed an initial agreement with Tellurian Inc
of Texas, to invest in its proposed Driftwood project in Louisiana, and
buy liquefied natural gas (LNG) for deliveries to India.
Irrespective
of the investment vehicle from India, the news that should come out of
Houston should be that India has sealed a deal to invest $X billion,
into the American market. The US networks, broadcast media shall carry
this news. Done, and dusted.
So, how shall September 22 play out
in Houston? Again, going out on a limb -- your author speculates as
follows. The American CEOs roundtable at Houston, with Modi, will be
held early morning of September 22, say over a breakfast meet, 8 a.m. to
9 a.m. Then, next the Modi-Trump summit will be held, say 9.30 a.m. to
10.30 a.m.
Thereafter, having sealed the deals, Modi and Trump
will together arrive in the "Beast", to the NRG stadium filled with over
50,000, amid roars as they both walk in. At the event, they will
jointly announce what they have accomplished in their morning meetings
before coming to this celebration.
Icing on the cake? Trump will
announce that he has accepted Modi's invitation to visit India as Chief
Guest to the Republic Day Parade on January 26, 2020.
Let the drums roll.
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