Trillion Dollar Infrastructure Investment in India Will Be Major Catalyst for the Rupee

The United States agreed to invest $10 billion dollars toward India’s proposed infrastructure development. This investment could mean a $200 billion market for American exports. The infrastructure expansion proposal will fund transportation improvements, agricultural development, communication technology upgrades, and much more.

So far, foreign investments in the Indian infrastructure renovation has been only eight to ten percent. The country itself will have spent over $500 billion over a five year period by 2012 and has plans to increase this amount by $1 trillion over the next five years ending in 2017.

At an Indo-US CEO Forum on Monday, 8 November 2010, US banks, financial institutions and companies like Citi bank, United Technologies, Pepsi, McGraw Hill, etc. got publicity as did India’s ICICI, Max Group, and more as they endorsed the proposed $10 billion to be invested by the United States in this far-reaching infrastructure project. The plan for this joint fund was to be finalized by India’s Finance Minister Pranab Mukherjee and Timothy Geithner, US Treasury Secretary.

And signs point to the fund being raised to $100 Billion over the years if both sides agree to the expansion. The decision by financial institutions and CEOs from both countries for participation in this fund was only one of a number of deals happening during Obama’s visit to the country. Singh asked that US companies invest in an overall $1 trillion for projected infrastructure plan. Part of this plan concerns supplying military aircraft for the Indian air force and an order from SpiceJet for Boeing to make 30 B737-800s jets.

These deals announced on 8 November 2010 were in addition to the over $14 billion in business agreements promised while Obama was in Mumbai. These agreements included proposals for improvements in agricullture, green technology, nuclear and other forms of energy, health and much more. Although there were other issues like politics and education discussed during President Obama’s visit, economics was entirely center stage.

Outsourcing by US companies is still a controversial topic and did not get much discussion. Singh did briefly mention that his country was not out to “steal US jobs,” but US companies were able to utilized India’s talent inexpensively. Obama did not comment but was positive about pushing US exports to India and thus increasing jobs back home. In the end, there was agreement between Singh and Obama on the subject of economics and they were in unity looking forward to the G20 conference in Seoul later in the week.