Ron Somers of US/India

GlobeSt.com: Tell me a bit about the history of the council.

Somers: We're currently celebrating our 32nd anniversary. The council was started by Henry Kissinger, who went to India as secretary of state in 1974 after India's first nuclear test. He had a very icy meeting with Indira Gandhi, but he realized that until we unleash the entrepreneurial spirit that's inherent in the private sectors of both India and the US, we'd never achieve the true potential of a relationship.

GlobeSt.com: To what extent has the mission evolved?

Somers: The founding member companies were Citigroup and General Electric, and today, of course, we have 250 of the largest US companies investing in India. The trend taking shape now is that two dozen global Indian companies--now acquiring assets overseas--have joined us, such as Reliance Petroleum, which recently teamed up with Chevron and Dow Carrefour in a $22-billion deal. So if anything has changed over 32 years, it was the shift from a US-centric advocacy activity. Much of this has been driven by 16 years of economic reform and the formation of a major confidence level on the part of the private sector.

GlobeSt.com: What was your impression when offshoring became the industry buzzword, says three or four years ago?

Somers: The Americans were the latecomers to India, with such exceptions as Texas Instruments, which had been there in a big way since 1985, and IBM. By 1995, you couldn't find a hotel room, such was the interest of western businesspeople coming in.

GlobeSt.com: Has there been a steady stream since then?

Somers: There were setbacks. In 1998 we had a setback with the Pokhran nuclear test, when high-technology cooperation went to zero. Then in 2002, the other major setback came with the standoff between Pakistan and India, when there were a million troops amassed at the borders and the ambassador for the US sent every American home. Meanwhile, 24/7, because of the Indian work force, US engineering was getting done and our value-added software was being developed.

GlobeSt.com: Since those days, has the shock of losing US jobs to Indian workers dissipated?

Somers: I have concerns--so do some of our members--that the backlash to outsourcing as we approach the presidential election could raise its head again. It's such a popular hobby horse. Some have said there will be this huge displacement over the next 20 or 30 years. There are other economist who disagree. But from a purely business standpoint, truly the world is flat and we must be global in our activities. There are 24 hours in a day and seven days a week. To press a send button and have our work continue overnight in India makes eminent sense. This is particularly true given that we share the same rule of law, that we both speak English and that we are both free-market democracies.

GlobeSt.com: Where will the dominant economy be in the future, China or India?

Somers: Our member companies would argue that it's China and India. If you're in China you're also in India. India's great advantages are, as I said, that it's a free-market democracy and an English-speaking nation. And, I think, it will have the advantage in the long run because its youth demographics are extraordinary. I mean, 54% of the country is under the age of 25. It's the one country on earth that, by the year 2050, will have a surplus availability of graduates. Not only does China not enjoy that demographic, but its one-child policy is recognized internationally as a huge mistake because there is no demographic dividend.

India once had a real population challenge, but the middle class has emerged as the fastest-growing class--now at 300 million--and there's a strong recognition of the values that drive the middle class. By contrast to China, families are cutting back by their own discipline.

GlobeSt.com: What has India's recognition on the world stage done to real estate investment there?

Somers: It's the council's fastest-growing executive committee. Last year alone, India was able to attract $12 billion in overall foreign direct investment overall. That compares with $70 billion since reforms in 1991. Of that $12 billion, $3 billion went into real estate and commercial development. There are currently 60 malls under construction. India is developing its interstate highway system, it has privatized its ports development, and it's upgrading its 25 airports and developing 25 additional airports. There's a huge transformation taking place as people move into cities for these outsourcing jobs. So the opportunity for real estate development is in commercial centers that will serve this large migration of population.

GlobeSt.com: Where will the market be in 2008?

Somers: You're going to see opportunities in the second- and third-tier cities. Some of the well-known cities are getting very pricey. Bombay has always been one of the most expensive cities on earth. So cities not so well-known on the tourist map are going to be attracting investors. You'll see Calcutta become an extraordinary magnet. Why? It has a strong university system, no job opportunities and real estate that's relatively cheap and available, where our companies can get established. So parts of real estate will be discovered that were not previously on the road map.