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An India booster explains why investors still largely overlook one of the world's largest emerging economies.
In 1978, President Carter made an official state visit to India. At the time, the trip was expected to herald a new beginning in the often-difficult relationship between the world's most powerful democracy and the world's most populous democracy. Unfortunately, nothing much came of the Carter visit, and relations between India and the United States stagnated. It took twenty years for another U.S. president, Bill Clinton, to visit India. He, too, heralded a new beginning and a new era of understanding between the world's most powerful and populous democracies. All indications are that President Bush will pick up where President Clinton left off in making relations with India a higher priority in U.S. foreign policy. Whether this is a true beginning or just another false start depends upon India as much as it depends upon the new American president. The ball is in India's court; it's leaders, in short, have to decide if they are going to matter.
For the past several years I have been associated with International Equity Partners (IEP), an asset management company that operates a very successful investment fund in India. As a board member of this company, I have traveled to India extensively. Like many Americans before me, I've taken an interest in India's art, culture, history, and politics. I have also been privileged to meet and befriend many brilliant, talented, and patriotic Indians in the fields of business, government, and the arts.
India and the United States have many important economic, security, and political interests in common. On economic and commercial matters, there has been a growing awareness of India among business leaders in the United States. The litany of facts, repeated ad nauseum by every Indian business and political leader, about a large middle class, English as the language of commerce, an established legal structure based upon the common law, a vast pool of highly trained technicians, etc., etc., is very well known and, frankly, getting tiresome. However, one thing still secret about India is that its regulatory and legal framework currently allows passive investors to put dollars into India and take dollar profits out. It takes a lot of legwork,...