Charles Dharapak/Associated PressAjay Banga, Mastercard chief executive and new chairman of the United States India business council, far right, in a meeting with vice President Joe Biden, center, on Friday, Jan. 28, 2011, in the Roosevelt Room of the White House in Washington.Ajay Banga, the president and chief executive of electronic payment company MasterCard, was recently named the new chairman of the United States India Business Council, a trade group formed in 1975.
Mr. Banga, the son of an Indian army officer, grew up in India and started his career here (which included, among other jobs, breading chicken at Kentucky Fried Chicken) before a long stint with Citigroup. He brought a new fast-paced ethos to MasterCard when he got the top job in 2010, Vikas Bajaj reported in this profile. Mr. Banga “shook up the company by declaring that any request to headquarters not acted upon in two weeks would be automatically approved — a directive meant to speed decision-making,” he wrote.
Mr. Banga takes the helm of the India-U.S. trade group from McGraw Hill chairman and chief executive Harold “Terry” McGraw III, at a somewhat rocky time. While bilateral trade between the two countries is expected to reach $100 billion in 2012, double what it was five years ago, several contentious issues have cropped up in recent months including an increase in U.S. visa fees and a wildly unpopular Indian government proposal to retroactively tax foreign investors.
In a recent telephone interview, Mr. Banga spoke to India Ink about what he dubs “worrying” signals from the Indian government, and the need for Indian business and government to respond to the world’s concerns.
Kainaz Amaria for The New York Times
Ajay Banga.
India’s trade push in recent months seems to be toward partners in Pakistan, China and the Middle East, and away from Europe and the United States. Would you agree and why is this happening now?
It is a little more nuanced than that. From India’s perspective when all the conversations and doors went nowhere, the country couldn’t wait for its global dreams, and that’s how all these deals, from Australia to Singapore, were done. In terms of Pakistan and China, it’s about time they did something on that point, to reduce tensions and boiling points with these nations.
India did try to move forward with Europe in recent years, and that got nowhere. With all these bilateral deals going on, the real issue is ‘should United States companies be concerned by this?’
It is very important that the U.S. corporations and the U.S. government work as hard as they can with India, on the bilateral investment treaty, or the U.S. India economic cooperation agreement.
The U.S. and the world need strong, stable growth in India.
What are the biggest issues looming this year that might affect the U.S.-India trade relationship? Iran? Visa fees? Something else?
There is no doubt that the visa issue keeps popping up. Also if something unexpected happens in the price of oil, or in Europe that slows down growth, you’ll always get countries acting in ways that are not the easiest environments for trade. There is so much pressure coming from domestic politics in the United States and in India now.
What is going to happen to the central government in India? That is the bigger issue. How do we keep the commercial angle on the table? That is the big picture. We want to keep all the big ideas on the table, from infrastructure funds to visa agreements to treaties.
How open is the Indian central government right now to listening to the USIBC and other foreign groups?
I have perspective on India and the government, going back to all my years of living there. India has had an amazing trajectory over the past few years.
Reform is needed, and everyone gets it. The problem is politics and its compulsions, and who are we to talk about India politics, look at U.S. politics. Politics doesn’t always allow reform in the way that corporations would like to see.
What we can do is talk about Indian leadership. Recent policies coming out of India have confused investors and not just in the U.S.
India can’t just sit there and wait for investment to come in; [officials] have to create the environment to make sure their lunch doesn’t get taken away from them.
The USIBC has been in conversations with Finance Minister Pranab Mukherjee and other top politicians here about the proposed tax reform and other changes that may deter foreign investment. What is the latest?
I cannot find agreement with the idea of playing around with the tax retroactively, that doesn’t make sense to me. You make companies and business very confused. The ability to make sensible predictions about what happens is very important to any business model.
There has to be pressure on the Indian government by Indian business people who are raising these issues.
I think the best way to grow is to think about how to make India a more attractive destination. India needs to grow; it doesn’t need to change the rules of the game. Two billion dollars [what the retroactive tax proposal could cost Vodafone, the company it is targeting first] is a really expensive price to pay.
There are so many other interesting things that can be done, from reforming the pension sector to shareholder voting rights to opening up retail foreign direct investment, to Walmart importing Alfonso mangoes, which could help this mutually beneficial relationship. There’s far greater strategic benefit to be had from, say, American companies helping Indian manufacturers get better at domestic production.
All these are important ways to grow, rather than look for $2 billion [from Vodafone]. That’s a really small number in a big picture.
Our two-way trade is going to be $100 billion, we should be looking at doubling that, that’s going to provide way more benefit to India than the $2 billion retroactive tax.
There is so much more positive that can be done.
Do you think it matters whether the USIBC is run by someone of Indian origin or not?
Yes and no. Previously you had Terry and Indra [Nooyi] and others run it successfully and now you have me, and the jury’s still out on what I can do. The USIBC is much more than its chairman. With the business realities on the ground, I think I can be helpful. I was lucky, I grew up and studied in India, then I came overseas, lived in Asia and the U.S. and I’ve done global jobs.
(This interview has been edited and condensed.)