India looming larger in Washington state exporters' sights
Puget Sound Business Journal (Seattle), March 20, 2006

By Steve Wilhelm

Cray Inc. this week announced it sold two supercomputers to research institutions in India, making a total of five of the $1 million machines Indian organizations have purchased from the Seattle computer maker.

The sale reflects the lure of India's fast-growing economy in Washington state, as that country increasingly buys from overseas and gradually opens its market to imports.

While China has been the center of attention of state trade interests in recent years , and probably will continue to be, India is proving to be a significant alternative market in certain sectors.

"There's an incredible, growing population of scientists and engineers, and they're using high-performance computers to accelerate science discovery," said Cray CEO Peter Ungaro. "For Cray, India is bigger than China."

To be sure, India is a fraction of China's size as a market for Washington goods, having received $424 million in exports from Washington last year compared with China's $5 billion. But exports to India have been growing fast -- to nearly twice what they were two years ago -- with half of the increase Boeing aircraft.

Geography is stacked against large volumes of commodity export cargoes from Washington to India, because there are no direct ocean cargo routes between the two. That means that any outbound cargoes must be transshipped in Asian ports such as Singapore or Hong Kong. Exports to other major Asian destinations, including Japan, China, Korea and Taiwan, are oiled by cheap westbound rates because ships and containers are returning to Asia after bringing imports to the U.S. market.

But India's 1 billion population, the 7 percent growth of its economy, and the fact that much of its population is highly trained, speaks English and is used to democracy, are attracting the attention of leaders of the Washington trading community who are troubled by China's autocratic government and lack of human rights.

"As a consequence, Americans are more comfortable in India because of human freedom and democracy," said Sam Reed, Washington's secretary of state.

And India's huge middle class, by some counts as large as the entire U.S. population, is becoming an enormous market for Western goods, with malls popping up across the country like mushrooms.

Some reflections of the growing importance of India in Washington state consciousness:
# Last week, a delegation of 14 Indian corporate leaders, reportedly the largest such group yet to visit the state, toured business and government centers, including Microsoft Corp. and Boeing Commercial Airplanes.
# That Saturday, the Washington House of Representatives passed a resolution recognizing delegation leader Hemant Sonawala, a University of Washington graduate, for his contributions to trade.
# On the same day, the World Trade Center Tacoma and the Indo American Chamber of Commerce signed a memorandum of understanding to support each other in developing mutual business.
# Gov. Chris Gregoire may lead a trip to India in 2007.
# The Trade Development Alliance of Greater Seattle will be conducting a business study mission to India this fall, similar to the trip it led to China last year.
# The state Department of Community, Trade and Economic Development would prefer India for its next overseas trade office, if and when there's financing available.

"It's certainly at the top of our list in terms of interest, and we're wanting to study it further in terms of arriving at a strategy," said Mark Calhoon, managing director for the department's international trade division.

U.S. -India relations were a focus of attention two weeks ago. A high-profile visit then by President Bush started a process of trade negotiations highlighted by a U.S. agreement to open its borders to the importation of Indian mangoes, long an area of dispute. Trade negotiators hope this will start India toward lowering its own barriers against U.S. goods, especially its high tariffs against agriculture imports.

For instance, Washington apples face a 50 percent tariff in India, frozen French fries must surmount a 40 percent tariff, and pears a 30 percent tariff.

"India is overwhelming an agricultural country, they still view agriculture exports to India as a threat to their agrarian society, and traditionally have had high barriers," said Doug Hartwick, assistant U.S. trade representative for South Asia.

Andreas Udbye, director of the World Trade Center Tacoma, said he believes the Indian market could start importing equipment from Washington to build its infrastructure, other technical equipment, as well as possible agricultural goods.

"With the size of population base there," he said, "it's going to be an interesting prospect for us, despite some of these barriers you see."