Arithmetic of Indo-US deals: $10 bn or $15 bn?

Monday, November 8, 2010

NEW DELHI - The mega commercial deals between Indian and US companies that were announced during US President Barack Obama’s visit here have raised one question: Are they worth $10 billion, as variously reported, or $15 billion as stated by White House?

A closer look at fine print suggests both figures have some basis.

According to the White House communiqu on Nov 6, the total value of these deals does amount to $14.9 billion. But what Obama has preferred to showcase, perhaps to address his domestic constituency, is the $9.5 billion worth of US exports to India due to these deals and which have been highligted by the American media.

“These cross-border collaborations, both public and private, underpin the expanding US-India strategic partnership, contributing to economic growth and development in both countries,” said the communiqu.

These will also support an estimated 53,670 US jobs, the communiqu added.

“Whenever I’m asked about Indians taking away our jobs, I want to say: You know what, they’ve just created 50,000 jobs,” President Obama himself said, referring to these deals during his joint press conference with Prime Minister Manmohan Singh.

Among the largest such deals is one worth $4.1 billion under which the Indian Air Force has reached a preliminary agreement to purchase of 10 C-17 Globemaster III military transport aircraft made by The Boeing Company.

Then there is an order worth $2.7 billion placed by Indian budget carrier SpiceJet for buying 30 Boeing 737-800 commercial aircraft, and another on General Electric to supply 414 engines worth $822 billion to power India’s indigenous light combat aircraft.

The other deals include the supply of six advanced gas turbines and three steam turbines for the 2,500-megawatt Samalkot power plant in Andhra Pradesh of Reliance Power, part of the Reliance Anil Dhirubhai Ambani Group, valued at $750 million.

This apart, the US Ex-Im Bank Agreement will provide Reliance Power $5-billion in financial support for the purchase of US goods and services for 8,000 megawatt of gas-fired electricity generating units and 900 megawatt of renewable energy.

Also announced during the president’s visit is pre-qualification of GE Transportation and Electro-Motive Diesel for a venture to make and supply of 1,000 diesel locomotives over 10 years to Indian Railways valued at over $1 billion.

The other deals cover areas including infrastructure, telecom, instrumentation, homeland security, aircraft, choppers and dredging.

Filed under: Economy

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