Indian firms said to weigh sites in N.H.

Software companies in India are looking to set up operations in the United States — including New Hampshire — said Ambassador Prabhu Dayal, head of the Indian consulate in New York, during a recent visit to the Granite State.

According to Dayal, Tata Consulting Services of Mumbai, India’s leading software exporter, opened a new 10,000-square-foot facility in Milford, Ohio, a Cincinnati suburb, for product development and service to customers in the Northeast. Other Indian companies are also looking for U.S. locations, Dayal said.

“And now a number of Indian software players are looking at the possibility of setting up their own enterprises here in the United States, and they’re looking at New Hampshire also in that regard,” said Dayal, who was in Concord to deliver the keynote address at the recent annual dinner of the New Hampshire Cultural Diversity Awareness Council.

While the worldwide recession has had an impact on business in Asia as well as the United States and Europe, Dayal said in an interview with NHBR that he expected to see trade between India and the United States increasing.

“As regards New Hampshire, there are a lot of trade inquiries that we keep receiving from there, both relating to export of goods from companies in New Hampshire to India and the import of items from India to New Hampshire and these are pursued very, very vigorously,” he said.

Wayne Jennings, chairman of the Cultural Diversity Awareness Council, said New Hampshire has several prominent India-born businessmen, including Nannu Nobis of Nobis Engineering in Concord, Marian Noronha, president of Turbocam in Barrington, and Kedar Gupta, founder of GT Solar Inc. in Merrimack and current chief executive of ARC Energy in Nashua.

“They’re creating jobs, expanding their businesses, they’re adding to the tax revenue here in our state,” Jennings said. And promoting business contacts with the world’s second most populous nation could further strengthen the state’s economy, he said.

“Establishing trade relationships with India could generate much needed revenue and jobs for New Hampshire,” said Jennings.

Unpredictable regulations

Officials at the state Department of Resources and Economic Development said they have had no contact from India about business opportunities in the Granite State.

The Office of International Commerce, which has organized a number of trade missions in various parts of the world, considered a mission to India a couple years ago, said Dawn Wivell, director, but ultimately decided against it.

“We actually looked at that to see how many would want to go,” Wivell said. “We didn’t get a huge response.”

Yet exports from New Hampshire to India have grown significantly, from $15.5 million in 2005 to $25.2 million in 2007. By November of last year, sales were already 17 percent above the ’07 mark, Wivell said. Computers, electrical machinery, aircraft parts and medical equipment are among the leading items shipped to India, which ranks 21st in exports from New Hampshire.

Despite the slump in world markets and a decline in domestic demand, India is expected to end its current fiscal year on March 31 with a 7.1 percent growth in its gross domestic product – amazingly, the lowest growth in six years.

The economy grew by 9 percent in the last fiscal year and 9.7 percent the previous year. India’s economy is the third largest in Asia, after Japan and China.

Foreign trade accounts for 40 percent of India’s $1.2 trillion economy, said Dr. A.W. Gondane, deputy consul general at the Indian consulate in New York.

India has had a mixed economy since gaining its independence in 1947, and has been moving steadily toward capitalism in recent yeas, Gondane said. “We have been freeing our markets. Our markets are now liberalized,” he said.

But Tom Winkelmann, president of Smith Tubular Systems in Laconia, has found the regulatory system in India both burdensome and unpredictable

Winkelmann, whose company makes hydraulic and fuel systems components for aircraft, said his firm’s experience “has been that the regulations on taxes or import and exports are obsolete as soon as they’re published. And whatever is published is kind of the beginning point for negotiations, which is a big challenge. It’s a very fluid dynamic.”

Nevertheless, Smith Tubular has been doing business with Indian companies for 30 years, Winkelmann said. Last July, the company opened a plant in Bangalore, home of its primary customer, Hindustan Aeronautical Ltd.

Factory workers in India are paid about $3 or $4 an hour on jobs that typically pay $15 an hour in the United States, Winkelmann said. Engineers in India earn about $30,000 a year, while their American counterparts earn about three times that much.

“We’re not in India for cheap labor,” he said. “We’re there to grow with our local customers.”

Marian Noronha is a native of India who came to the United States 30 years ago. As president of Turbocam Inc. in Barrington, a maker of jet engine parts, he has customers in several countries in Europe and Asia. He has divided his operations in India into three companies, launched at different times over the past eight years, to take advantage of a lower tax rate for start-up companies.

But he has found bribery to be a common practice in his native land and claims custom officials will sometimes “hold equipment hostage” to extort a higher fee.

“One of the things we started in India was a No Bribe Coalition in response to the fact that people could not do business without dealing with bribery at every level,” he said. Companies and officials in the coalition publicly pledge to neither pay nor accept bribes, Noronha said, even though refusal can sometimes be costly.

After a flood in India, Noronha had water treatment equipment shipped in from the U.S. But he was told by officials he would have to pay $10,000 for a license to install it.

“I probably could have gotten it through with a $1,000 bribe,” he said. “That’s all they were looking for. But I paid the $10,000, and now we’re trying to recover it through an appeals system in India. The consul general in New York is trying to help.”

According to Ambassador Dayal, India has already done much to reduce the burden of bureaucracy and the cost of doing business in India.

“It is true that at one time India used to have bureaucratic red tape,” he said. “But all this began to change after 1991, when India liberalized its economy. The controls, the checks which really have kept investors and businessmen away have begun to disappear. And of course there is always room for improvement, but that situation no longer exists where 100 different approvals were required.”

Asked about incidents of bribery, Dayal said, “Can you name a single country, including your own, where there is no corruption?” Corruption occurs in all societies, he said, but his government is pursuing and punishing it.

“What is important is that the methodology should be in place for putting the people who are corrupt in the dock,” he said. “And that methodology exists today.”