India set to announce big FDI into America

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 the 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, public and media will demand to know what they both accomplished for their every 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 invested 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 holding an early morning of September 22, say over a breakfast meeting, 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.

The 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.

(The writer is the President of The Imagindia Institute)

BY ROBINDER NATH SACHDEV