Henry Paulson

Washington, Oct. 27: Henry M. Paulson Jr., the US treasury secretary who will kick off three days of official engagements in India tomorrow with a visit to Calcutta’s Grameen Sanchar Society, is bringing two symbols of America’s commitment to closer economic ties with South Asia’s largest country.

In the run-up to his trip to India, the US Federal Reserve granted a licence to ICICI Bank to open a branch in New York, the result of more than three years of strenuous efforts by the bank to upgrade its token representation in the Big Apple.

And to underline his determination to allow greater access for Indian financial institutions to the US economy, Paulson insisted that Jack Jennings, a key official in the Federal Reserve Board — which grants bank licences — should accompany him on the trip.

Jennings can expect to be persistently questioned in Mumbai about the fate of a long-pending application by the State Bank of India to open a branch in “Little India”, the commercial section of New York’s Jackson Heights.

If the grapevine on Wall Street is to be believed, Jennings will return from his trip to India with Paulson and grant the licence to open the branch.

Seeking financial reform is at the centre of the treasury secretary’s meetings in Mumbai and New Delhi.

But his arguments will lack credibility when India’s leading banks find it difficult to negotiate the maze of US regulations such as the International Banking Act, the demands of the Office of the Comptroller of the Currency and the Federal Reserve to gain access to the American market, while Paulson is seeking a level-playing field for the US financial community in India.

Paulson will find in finance minister P. Chidambaram, his main interlocutor in India, a tough negotiator and he knows it. Only last month, at meetings of the Indo-US Trade Policy Forum and the Indo-US CEO’s Forum in New York, Chidambaram made a comprehensive case for allowing Indian banks to open new branches in America, according to commerce minister Kamal Nath.

Kamal Nath will also have a meeting with Paulson, at which the stalled world trade negotiations will feature prominently. Infrastructure investment by US companies in India and developing Mumbai as an international financial centre are the two other major items on Paulson’s agenda.

Before his departure from Washington, Paulson told the Council on Foreign Relations that “a financial footprint in Mumbai makes a door through which the world can invest in India, and India can invest in the world”.

At an infrastructure investment conference in Mumbai on Monday, attended by 150 Indian and 50 US industrialists, Paulson, Chidambaram and Allan Hubbard, President George W. Bush’s top-most economic adviser, will address Prime Minister Manmohan Singh’s calculation that the country will need half a trillion dollars in infrastructure investment in the next five years.

Ron Somers, who has been designated as the keeper of minutes of this major conference, told The Telegraph before emplaning for India yesterday that there was complete agreement between the business and government in the US that Calcutta was destined to be resurgent India’s gateway to the rest of Asia.

Somers, president of the US-India Business Council (USIBC), set in motion a determined engagement of Bengal by America’s private sector by leading a USIBC delegation to Calcutta in March this year, which met chief minister Buddhadeb Bhattacharjee.

The USIBC team, on its return, persuaded Susan Schwab, the US trade representative, to visit Calcutta shortly thereafter. A member of Bush’s cabinet, she became the senior-most serving US administration official to visit Calcutta in recent memory.

“I see tremendous opportunities for US companies in Bengal, with its relatively low real estate prices, human resources and location,” Somers reiterated yesterday.

On Tuesday, Paulson, Chidambaram and Kamal Nath will speak at the annual Fortune Global Forum which is being held in New Delhi this year.

On Wednesday and Thursday, Richard Parsons, chairman and CEO of Time Warner Inc., will host a cross-section of the Forum participants in Calcutta. This group will take a look at what some Fortune 500 companies are doing in the city, engage a group of students and have a working lunch with the chief minister.