India should not insist on local content: Bruce Andrews

With just a few days left for the Make in India week, US Deputy Commerce Secretary Bruce Andrews, who is also leading a delegation of 18 companies on smart cities, says India should not insist on local content. Andrews, in an exclusive chat with CNBC-TV18's Sajeet Manghat, says insisting on local content as part of the Make in India will be counter-productive in the long run for the country. Further, he is of the view that Indian companies have scope to be competitive globally.Below is the verbatim transcript of Bruce Andrews’s interview with Sajeet Manghat on CNBC-TV18.Q: You are in India with 18 companies trying to look at this smart cities project and bring in more investments into the smart cities. What has been your experience as far as smart cities project is concerned?A: We are very excited about what India is doing and the opportunity with the Smart Cities Initiative we brought 18 leading US green energy technology companies to look at how the United States can work with and partner with India is part of this Smart Cities Initiative. We think the United States can be a very valuable partner and a natural partner with India in this initiative. US companies will be the backbone of that effort. So, our companies are meeting with both, policy makers, local leaders and also businesses to discuss how we can work together. In addition United States government Prime Minister Narendra Modi and President Barack Obama agree that the United States would take the lead with three Indian cities. So, we are very excited for that partnership as well. We have already started working hard on that effort. Q: That brings to the second question which I have. You are going to partner or be the lead partner for Ajmer, Allahabad and Vizag. Vizag has been selected in the first phase of smart cities. That means opportunities immediately for many of the US companies who will be looking at Vizag. What kind of opportunities will that be for the city of Vizag?A: It is too early to say exactly what opportunities, what we have done is our US trade and development agency is actually partnering with several American companies to help Vizag produce a master plan. That master plan and the priorities of Vizag will then really help set which US companies will be most helpful in partnering the effort. One of the things that we have been very clear on is not just those three cities, we want to make sure American companies, American technology and American knowhow is available to the other 100 cities as well to help meet their needs. Q: What about the fact that smart cities will take billion of investments in terms of technology, in terms of setting up manufacturing facilities in India? Will the US companies which you are leading today would be looking at partnerships or they will be looking at local content in India?A: It is couple of things. First most important thing is getting the financing of these efforts. We actually met with Minister Venkaiah Naidu in New Delhi on Monday to talk about how these efforts are going to be financed. The special purpose vehicle (SPVs) that are going to be created in the work of level is one part of that but there will have to be a great deal of work of how these deals are going to be financed and how are they going to be structured. So, we are not at that point in understanding that yet but I do think the American companies are very interested. One of the messages that we have carried is build the relationships first and not necessarily demand the local content because the concern about the local content provisions is a disincentive to innovation because what you end up doing is not getting the most innovated companies the innovative technologies. They can be competitive on a global basis. What we have seen and number on examples this is what is really important you get the companies doing business together and then once they build a market those companies will then follow and look to manufacture in India.For example, General Electric has signed a significant deal with Train Locomotives and one of the reasons that bring in some of the manufacturing here is because they are going to have a big enough market to service that manufacturing and that is important. Q: What about Make in India for India and the globe?A: For Make in India to be successful it is one thing to service the Indian market. However, you want your companies to be globally competitive and part of the global supply chain and local content requirements actually serve as a disincentive for companies to be globally competitive. Yes, they are helpful in competing in your domestic market but you want to do is make some competitive not only in the domestic market but is part of the global supply chain in the global business. Q: That is the same issue, you have something called SelectUSA where you are trying to bring in investments in to your country where because you want people to come and do local manufacturing there. India is doing the same thing for Make in India where they want investment into our country and they want manufacturing coming up here. Now the same logic can apply to US as well saying that if you are attracting local content in your country and that is justifiable then why isn’t justifiable in India?A: We don’t have local content requirements, our markets are incredibly open. Any business, any technology can come do business in United States and participate in our market. One of the reasons the places like Silicon Valley are so successful in creating an innovative ecosystem is they are very open. They are requirements telling businesses how they should compete because then they can take that and we competitive on global scale.For entire interview, watch accompanying videos.