One of the founder members of the India Caucus, Dr McDermott has been instrumental in generating support for India-both political and economic at Capitol Hill.

Dr McDermott was in Hyderabad recently to attend the CII Partnership Summit 2001.In an exclusive interview to Subhadip Sircar, he outlines his views on India's economic reforms programme and in what direction Indo-US relations are headed under the new Bush regime. Excerpts:

You have seen the reform process in India right from its initiation in the early 90s.Are you satisfied with the pace of reforms especially in the context of Indo-US economic cooperation?
The process has been continually moving. There have been problems that have emerged but I see them as part of the process. In the context of Indo-US relations,the problems are largely because of not understanding one another.

We have to understand each other. India is a democracy--politicians may want to change but they have to deal with constituents. If you understand India, you will realise that the country has made progress,but the right direction is required. People are trying to invest in India. The Enron experience was a surprise. They had to start all over again, but Enron was patient.We now have a similar thing with the Ennore project.

Projects crawl along at a snail's pace. Capital is always mobile-India loses opportunity because they are not nimble enough to make changes. I do not see any ill-will on India's part but this is embedded in the cultural process of India.

But in this post-WTO regime of free trade,doesn't India lose out because of these delays––countries like China look a more attractive destination.

Everything is not perfect with China. The advantage that the Chinese have is that they started 10 years earlier than India. China opened up its economy to investment in 1978,that has given time to the US to understand the Chinese. But from the long-term point of view, India is a better investment destination because of varied factors like freedom of press, rule of the law.

What does one do in case such a problem arises in China?What are the traditional economy sectors where you believe that the two countries can cooperate ? Do you feel that information technology(IT) has become the only focal point?
Society operates on fads––like wearing Levis. I think that the textile industry has an important role, agriculture and steel are also potential sectors. IT is now religion. There is room for agricultural research, fashion industry and other areas. Many things are part of the shared trade- the distortions will correct itself.

What are the areas in which India and US can co-operate in the negotiations leading up the possible next ministerial round at the WTO?
One of the things India can do is to accept its role as a leading economy. They have the dilemma always-a nation of one billion with all kinds of problems. There are certain areas where they can lead-IT, bio-medical, agricultural technology. India needs to decide whom they want to align with.

India has to stop with being underdeveloped-it cannot be a world leader and act like a small country. There is no other country which has such potential, people or infrastructure. India can be the world leader in IT. For 40 years, India operated as a socialist country in isolation to the western world. They were officially non-aligned which we took as alignment with Soviet Union. It takes a little while to open up-the Narasimha Rao government had no alternative in 1992. I believe that India has to be a world leader.

How do you view the current process of reform undertaken by the Vajpayee government?
Since the BJP got control, they have continued to move on the reform trail. The insurance sector opening up has been a major move, but there is a lot to be done. I do not see the government as being unable to move, but they have been struggling with coalition. The Congress government had absolute majority. They were better off that way. I think there are impulses to move.

Which are the areas in which you believe that the reform process can be expedited?
The reforms in the high-technology areas can move faster. The whole area of financial sector liberalisation needs to be looked into. The government is struggling with Indian Airlines privatisation. They are talking of privatising the banks, but you have banks going on day-long strikes.

How successful do you feel that the Indian Caucus in the Congress has been to promote India's cause?
I perceive my role as a facilitator. The India caucus has had a positive effect in educating the Congress. Previously India was synonymous with the Taj Mahal, cricket or disaster.

Indian-Americans have also played a very important role. In the last 10 years, Indian have come out of the closet. Their desire to have a vibrant economy is the same. India has an important role to play, but they have to be positive. India has not signed the e-commerce agreement of the WTO. The potential for e-commerce is enormous.

How do you think Indo-US relations will be under the new Bush regime?
There is no reason why the new regime will not be involved. I think all this will accelerate under the Bush regime.