India growth surges, economist says
Posted on Friday, May 9, 2008
ROGERS — Doing business with India can have great challenges, but it also has great rewards, the senior international economist for the U. S. Department of Commerce told a group Thursday at the Arkansas World Trade Center.
Abdul Shaikh is also the regional coordinator for Africa, the Middle East and South Asia for the department’s Trade Information Center in Washington. He spoke to about 20 gathered for an “informative Lecture Series” celebrating World Trade Month.
India had the fastest-growing free-market economy in the world in 2007 and U. S. merchandise exports to that country grew 75 percent last year, Shaikh said.
“That is an unprecedented increase in one year,” he said.
The country’s population of more than 1 billion is second only to China’s, he said. And it may top China’s population within a short time because of China’s governmental directive of limiting children to one per family, Shaikh added.
India’s free-market economy makes it a natural alternative to China for low-cost components now questioned because of problems such as tainted medicines and lead-laced toys.
Beverly Graham, a sales and customer service manager for Pel-Freez Biologicals in Rogers, is keenly interested in India’s ability to replace the chemicals her company once obtained through China. She attended the lecture to get information about chemical company sources in India.
“We don’t produce anything that goes into humans but many of our suppliers do, so they stopped dealing with China altogether,” she said. “We need alternatives.” Between 250 million and 300 million of India’s population are classified as middle class, and 55 percent of the total population is under the age of 25, Shaikh said, both of which make the country an attractive market for most products.
But the pro side of the balance sheet is offset with a few formidable cons, Shaikh said.
A native of India, Shaikh said he recognizes the limitations of the country’s poor infrastructure, communication challenges and bureaucratic structure as bottlenecks to foreign investment and trade.
The country is pushing forward with economic changes started in 1991 and continued through multiple turnovers in the government’s political makeup, Shaikh said. The country is lessening restrictions on foreign investment and allowing partial partnerships with native companies to open markets to the world.
And the limitations imposed by primitive infrastructure are an opportunity for equipment and other construction exports from the United States, he said.
Tammy Thurow, vice president of marketing and membership services for the Bentonville-Bella Vista Chamber of Commerce, wanted to gather information for the Wal-Mart vendor members she works with daily.
She also has inside knowledge of the turmoil the changing India economic and political climate is creating for residents used to mom-and-pop stores and markets. Her husband formerly worked for India-based Reliance Fresh supermarket chain when riots damaged company stores last year. Thurow said the vendors selling to the company were happy with the Reliance Fresh arrangement but other vendors wanted their chance, too. Shaikh said the people of India are “well schooled” in political protest and treasure their chances to disagree. Other characteristics of the typical middleclass India resident would also influence their future growth, he said. “They love to shop,” he said.
To contact this reporter: sroberts@arkansasonline. com
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