'The US Is Overreacting'

The general feeling in the Indian corporate sector is that the US action was uncalledfor at a time when the world opinion was turning in favour of India. Says F I C C Isecretary-general and economist  Dr Amit Mitra: "It is an overreaction on partof the US. This is disappointing for the Indian economy as the process to lift thesanctions has already started."

Interestingly, the US itself has lifted sanctions partially and allowed funds flow fromUS Exim Bank and O P I C worth $300 million and $400 million respectively. Says FICCIpresident Sudhir Jalan: "The US is blowing hot and cold. On one hand they are liftingsanctions and on the other they are imposing such bans."

Will Indian companies be affected? Most companies do not think so. Says Vinod Doshi,whose company Walchandnagar Industries figures in the list: "The net impact of such aban will be marginal because for all companies figuring in the list, any involvement inIndia’s space or nuclear programme is but a small portion of their overalloperations." True, because the total money involved in the ban is worth only about$100-120 million, just a small fraction of Indo-US trade.

What will then be the net impact? Says Mitra: "They are crippling their owncompanies as the ban restricts their exports to Indian companies." Jalan reiteratesthis: "It is not in the best interests of US companies. India will now go to Europeand the net loser will be the US companies."

India also plans to lodge a strong protest in the World Trade Organisation (W T O) ,but will it gain out of it? Article 21 of the W T O charter clearly states that anycountry could undertake similar action only when its security is threatened. Mitra feelsthat this is a contradiction in philosophical terms as multilaterally the US has conferredthe Most Favoured Nation treatment to India but bilaterally it is resorting to suchpressure tactics. Says he: "Article 21 is so drafted by the developed nations that itwill be extremely difficult for developing nations to extract any advantage out of it. AllIndia can do is fight on the interpretation of such a clause as US security is definitelynot threatened by India." "Prima facie," says Jalan, "India has astrong case." A US official disagrees : " We don’t consider that India hasa good case."  As an example, he spoke about the US embargo of Cuba—imposed for security reasons— which has been in place for nearly fifty years and hasnever been legally challenged.