With one third of the world’s poor population located in India, the emerging country of India has been striving to help its people achieve a better standard of living. Thanks to the programs that are provided by the government to alleviate poverty, India’s economy has grown steadily over the years. When the government noticed that the world’s most extreme poverty rates fall in rural Orissa and Bihar, it began to focus on farm subsidy programs, with hopes of lifting the economic level of these rural regions. However, its farm subsidies are challenging the World Trade Organization's (WTO) ability to keep an important international trade deal on table.
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Emerging markets has become a phrase that incites a lot of excitement. With high growth rates and the possibility of huge returns, investors have flocked to put money in the best performing emerging markets. One of the darling emerging markets over the past decade has been India. The combination of a large landmass, rich with resources, and the world’s second largest population has been the framework that allowed India’s GDP to grow at an average rate of 7.65% a year over the past decade. This well outpaces the United States as well as almost every western economy and has caused investors to salivate at the potential they see in India. Regardless of these extraordinary statistics, recent stumbles in India’s economy has reminded everyone just how risky emerging markets can be.
Starting in 2008, the financial crisis affected most of the countries in the world. Recently, a light of global economic recovery was shed on many of these countries. However, a new challenge aroused in the Asian currency price market. In India, people hope that the government can change a record-low currency trading situation, accelerating inflation. Furthermore, they hope India’s economy can find its way back to the normal path.
One of the more unique ways of fostering entrepreneurship that has really caught on in the last few years is microfinance. Initially started in 1976 by Muhammad Yunus in India, microfinance is where a financial institution gives a small loan (usually in the $5-50 range) to an impoverished family that otherwise wouldn’t have access to credit.
The World Trade Organization is investigating an Indian governmental program that requires solar energy producers to use Indian manufactured solar cells instead of imported products. Several U.S. environmental groups are pressing the WTO to not pursue action against India, saying that ending the program would threaten the ability of India to cut greenhouse gas emissions. The irony is that India’s green energy industry would be harmed if no action were to be taken, a blow to the environmentalists goal of increasing alternative energy use throughout the globe.
In 2010, Emirates ordered 32 new A380 macrojets from Airbus, which opened the door for the airline market in India. Shortly after this, Airbus announced Monday that it had a received an order for $24 billion worth of new single-aisle jets from the Indonesian budget airline Lion Air. While the world is expecting growth of the airline industry in developing countries, the global air traffic industry is actually shrinking. Let’s examine the global air traffic industry and analyze the various factors affecting the business environment of the industry.
India’s trade gap, especially as of late, is increasing rapidly. This is due largely in part to substantial percentage hikes in imports and stagnant export growth. Some are growing concerned over the rising account deficit, which is directly correlated to the current trade deficit. To put India’s trade deficit in perspective, exports grew by 0.8% in January while imports grew by 6.1%.
As globalization has emerged and evolved into one of the leading factors driving business decisions today, certain countries and economies have been profiled for their seemingly important role in this new age. India is seen as one of those stars in the age of globalization but recent setbacks may warrant a second look. With anemic growth in the United States economy and the European Union with its whole host of problems some economic consequences for India seem legitimate. However, with the missteps that India businesses have taken, both at home and abroad, the business practices of the country must be questioned.
There are certain facts of life and globalization is one of them. But with completely integrated social, economic and structural systems comes both a profit and a price. The phenomenon has occurred in three waves across modern human history: beginning around 1870 and ending at the start of World War I, reviving in 1950 due to multiple trade agreements and ending in 1980, and finally establishing permanently at the fall of the Berlin wall in 1989. But as the flow of goods, services, currency, technology, legislation and human capital increase across national boundaries, there have been a number of costs (both apparent and latent) that a variety of stakeholders have had to bare.
Doing business in India can be difficult for the new executive sent on assignment to India. As the world’s second largest country based on population, India is expected to become one of the biggest economies by 2050, projected by PriceWaterhouseCoopers. What is strange is that India does not have a truly national language, unlike the other large economies such as China and the United States.
The customer is always right. This golden rule of business even resonates with giant corporations—the consumers are the main priority, because without their support, revenue will stop pouring in. For example, if the consumer wants businesses closer to home, that’s what they’re going to get. The distance problem has initiated a recent trend in outsourcing that can be seen in countries all over the world, most recently India and the United States.
In September 2011, India lifted a four-year ban that was responsible for limiting the exportation of wheat and rice. Because of this ruling, India exported over 10 million tons of grain and soymeal in the first half of 2012, a figure that is nearly double what it was in the first half of 2011. The current drought in Russia, Ukraine, and Kazakhstan has significantly limited wheat production in these countries, yet world wheat prices have remained relatively stable due to India’s timely increase in the exportation of this commodity.
Water is a precious thing. But why? After all 75% of Earth is water. However, of this percent, only 3% is drinkable. And of this, 70% is found in the polar caps as ice. This means that of all the water on Earth, less than 1% of it is available for us to drink. That’s why we are constantly being reminded to save water. Global warming, increase in population and industrialization have all taken a toll on Earth’s water supply. But saving water is not the only thing we must do to protect it. We need to make sure that we don’t pollute it, nor let others pollute it. Aamir Khan, in his show Satyamev Jayate (with English subtitles), shares insight to the devastating water problem in India.
This past week, ratings agency Standards & Poor’s warned India that it risks a sovereign debt downgrade which would result in the country falling off the list of an investment grade country. Currently, India is rated at the lowest investment grade rating – BBB. Falling below this level would mean that India bonds would be considered junk bonds. Much of the blame is assigned to the Prime Minister, notes S&P, pointing out specific problems with the political system “that has more gridlock than the United States,” coupled with high inflation and a falling currency and GDP.
There is no question that India is one of the fastest growing economies in the world. It has a massive population that is eager to learn new skills and grow companies. Still, there is one factor that may be holding India back from reaching its full potential: lack of women in the workforce. While India has made great strides in the past several years in this area, there is still a large discrepancy between men and women in the business world. According to a recent report India has one of the lowest percentages of women on Executive Boards and in leadership positions worldwide.
China has grown immensely in the global gold market. India has been the largest gold consuming nation for many years, but in 2012 China is predicted to take over the top spot. Chinese demand reached around 770 metric tons in 2011. This demand is a 20% increase from the previous year. This growth is strong, and experts see the demand continuing to skyrocket in China. There are several factors that have caused this increase in demand.
For the past few weeks, Western states have not only imposed sanctions on Iran, but also convinced many Asian countries to do the same. These sanctions are an economically crippling bargaining technique to pressure Iranian officials into discontinuing their uranium enrichment program, which American and European officials claim to be a nuclear weapons program with malicious intent but Iranian officials claim to peaceful and a national right. Furthermore, many financial institutions that interact closely with Iran’s central bank have also been targeted. The assets of Iran’s central bank are currently frozen that are linked to Tehran.
Starbucks Corporation recently announced that it will begin opening cafés in India and plans on opening its first café as early as August. Starbucks’ arrival in India is a result of a joint venture with Indian company Tata Global Beverages, which is currently the country’s largest conglomerate. Although India is traditionally a tea drinking country, consumer demand for coffee is increasing. In fact, domestic coffee consumption has increased by an astonishing 80 percent in the last decade.
The storm caused by the European Debt Crisis has loomed like a dark cloud over much of the world. But certain sectors of the economy, the transport manufacturing industry in particular, have weathered the turbulent markets. It is the rise in purchasing manager indexes for the United Kingdom, Switzerland, China, India, and Australia, coupled with the decrease in Germany's unemployment that make economists suggest a boom in the export of cars and machinery for the coming year.
Globalization and the growth in emerging markets have driven significant changes in nearly every industry around the globe. This no different in philanthropy where the “old” standard of donations being led by wealthy Westerners is being turned upside down. Explosive growth has led to tremendous wealth creation in many developing countries and veteran donors are urging the new rich to donate to important causes. Philanthropy has also been repackaged into a businesses where consumers help donate products to needy causes.
Solar power has been a hot topic all over the globe. Many countries have made commitments to use solar panels to clean up energy sources. Still, it does not seem that all of the hype has lead to much production. Many countries have begun these initiatives to "green up" their energy, and now it seems that a reduction in solar panel prices might begin to press the issue.
Trade relationships between India and Pakistan will soon normalize as bilateral ties have been improved by Pakistan granting India the status of "most favored nation". This decision has been long awaited by Indian businesses since India granted the same status to Pakistan in 1996.
The way we shop changes rapidly from year to year. This is due to the various technological improvements that are introduced to the market so often. From laptops, to tablets, to smart phones, and reliable networks it is extremely convenient to switch from the traditional brick and mortar stores to online shopping which has increased tremendously in the past few years. Consumers in Canada, for example, spent $15B online last year alone. Social media provides just the right push to turn users in the direction of shopping at the click of a button. Customized advertisement on Facebook based on user preferences listed in their profiles and opinions expressed on Twitter open the door for users to explore different shopping websites and possibly find items that they would not be able to find in stores otherwise. Furthermore, the internet provides a wider variety of products and comparing prices is much easier because when online, a customer can be searching multiple websites simultaneously.
Technological innovation has helped countries grow and has aided businesses in generating profits for many years. However, in India recently, technology has even found a way to help feed India’s poorest. In the country of India, those living below the poverty line are allowed to buy basic food such as rice, sugar, and wheat at highly subsidized rates at government-run Fair Price shops. The shoppers at these stores have a plastic card with their photograph on the face of the card. After purchasing food, shoppers scan their smart cards and then the shop owner asks for something else—their fingerprints.
With costs rising for many businesses, companies are looking for ways to save money and lower costs. Outsourcing may be the best way to do just this. The Philippines has recently become an important destination for international companies wanting to outsource their call centers. For many years, India has been a top choice country for outsourcing but the tides are beginning to change. With high number of fluent English speakers coupled with clear and neutral accents, the Philippines has attracted many companies that are looking to outsource their call centers.
Most people think of China or Japan as the most prominent auto manufactures in Asia. That has certainly been the case for the past years but now the country of India is becoming a major manufacturing hub for the continent. Nissan’s Indian factory is less than a year old and covers 600 acres making it one of the company’s largest plants worldwide. Nissan is just one of the many major Asian auto companies that have set up manufacturing hubs in India.
India, the world’s tenth largest economy according to the International Monetary Fund, is seeing troubling signs in the short-term outlook. Recently, India has seen a slowing growth rate in GDP, increase in inflation to 9.1%, and a decrease in local investment. Many economists attribute these worrisome signs to the corruption and scandals plaguing the growing nation. In recent months, the central government has been struggling to get the economy back on track.
With its close proximity to Canada and Mexico, most United States exporters export to only one market and unsurprisingly this market is usually Canada. However, many smaller companies that work with the U.S. Commercial Service have found other great markets filled many new customers. Some of the best markets with countless opportunities for U.S. companies are Vietnam, India, Indonesia, India, China, Taiwan and Thailand. You can learn more about these markets by watching these videos on India, Indonesia, and Vietnam posted on the Export.gov website. With these videos, you will learn about some of the many sectors in these markets where U.S. companies are competitive. In the videos, you will also be introduced to the top U.S. commercial diplomats in these markets who will help your company evaluate and enter exciting new markets.
Supply chains have received a lot of attention lately including being featured in globalEDGE’s April Newsletter on the emerging industry of Reverse Supply Chains. However, another important part of a product’s life cycle is end-of-life management. Historically consumers’ only choice was to throw unwanted products away and manufacturers could help the environment by reducing packaging or making it biodegradable. Many consumers are now being offered the opportunity to recycle and companies around the world have sprung up to offer products and services that create profit while helping municipalities and citizens "Go Green!"
To increase productivity and save large amounts of money on labor costs, many companies are either setting up outposts overseas or contracting third parties in other countries to do some of their work for them. This trend is known to most as offshoring, and while it continues to grow, many predict that we haven't seen the worst of it.
While much of India has modernized, the agriculture sector has yet to do the same. This has made it very difficult for farmers with smaller amounts of land to stay afloat when inopportune conditions arise. Recently India experienced a prolonged monsoon season that has ruined the crops of several local farmers. Many local farmers do not have the modern drainage systems required to carry the excessive rain away. Many crop prices have soared, onions prices have grown 600%, but the farmers affected by the weather have not been able to reap the rewards of this recent boom.
For just about as long as any living person can remember, Bollywood and Hollywood have both been producing movies and been dominating their respective countries and audiences. As far as Bollywood goes, many people in the U.S. view this burgeoning industry as a distant neighbor (although Bollywood was created 11 years before Hollywood, in the 19th century no less) of our hallowed Hollywood. In some sad cases people think it is just a misspelling of Hollywood. With both Hollywood and Bollywood having already survived over a century each and the massive trend towards globalization, most people would think the similarities between the two would be great. In actuality, the difference is vast.
Cotton prices have recently reached record highs and have begun to cause some clothing retailers problems. Many European clothing stores import their cotton from various countries in Asia, so they are often at the mercy of their suppliers. China and India are two of the top producers of cotton in the world, and they have recently undergone some industry changes that may lead to lower profit margins for their European buyers.
Remember several years ago when microfinance was all the rage? People believed that by loaning small amounts of money to the poor in hard-to-reach rural areas they could potentially stimulate the economic development of those areas. globalEDGE even wrote a few blog posts about it here and there. It seems like microfinance would be a win-win for a financier who wants to give back to the world: they can help out the poor while making profits for themselves. However, looking at it retrospectively, is that how microfinance has worked out so far? It almost seems too good to be true…
By supporting India for a permanent seat on the United Nations Security Council, President Barack Obama positioned the United States for a long-term political and economic partnership with the emerging Asian nation. While much focus has been put on the political alignment of the United States and India against their rivals in China and Pakistan, there are also great opportunities for business partnerships to emerge. As is often the case, strengthened political ties may lead to strengthened economic ties as well.
India, being known as a country inclined to new technology, has added yet another innovation to its inventory—a talking newspaper advertisement. When readers opened to the last page of a popular Indian newspaper, a voice began to talk resembling a radio commercial. The source for this surprising advertisement was a light-sensitive, voice activated chip that encouraged readers and listeners alike to buy a new Volkswagen sedan. Weighing only one ounce, this paper-thin chip is a groundbreaking design. This “talking newspaper” can change the way print media is viewed and provides businesses a new way to communicate their messages with customers.
Seasonal rains and high global temperatures have caused many problems for the agricultural industry this year. Many countries rely on agricultural investments for income to meet global food production demands, making this a hard year for many regions. Food insecurity is an increasing problem throughout the world. Food production has been greatly affected by climate change as both heavy rains and dry fields have taken their toll on agriculture.
We all know that countries like India and China are becoming global giants. In order for India to keep up with countries like the United States and China, it must improve its railroad system. Railroad routes are often severely backed up due to overbooked trains and the fact that railroad travel is the only affordable option for many people in India. In order for India to compete with China for major global economic growth, Indian transportation needs to be improved significantly. The Prime Minister of India recently set a goal of an annual growth rate of 10%, but without a major renovation of India’s transportation system this goal will be unattainable. It looks like India has a lot of work to do to continue to compete globally.
South African President Jacob Zuma has recently visited India in a bid to strengthen bilateral trade and investment between the two countries. Both are developing nations and are very interested in attracting investment from each other. India and South Africa are thirsting for more business from companies in both countries. India is specifically looking towards bigger investments in infrastructure and a chance to tap into South Africa's rich natural resources.
After panic spread last year as the price of Sugar rose due to poor weather conditions in Brazil and India, things look hopeful as prices become more stable. Sugar production is seasonal and is heavily affected by weather conditions. Last year India struggled to produce sugar due to a long drought after the Asian Monsoon. While India was waiting for water, Brazil struggled to keep the water away as it had heavy rains which created waterlogged crops.
The United Nations recently forecasted a 3 percent growth in the world economy. Much of this growth is expected to come from developing nations. The majority of this contribution by developing countries comes from growing global powerhouses China and India. A further role they play is in generating a “spill-over” effect to other developing countries, which helps to generate the growth of infrastructure, industry, and trade. One such case which can be examined is that of India and Africa.
The BRICs markets – Brazil, Russia, India and China – have survived the global economic crisis quite well, emerging even stronger than before. These counties have large surpluses in international trade as well as reserves in foreign currency, which really helped in the last downturn. They are on pace to equal the G7 in size by 2032, seven years earlier than originally predicted.
Trends in the Aerospace and Defense Industry have been shifting lately; what was once a primarily domestic industry has started to become global in nature. As highly populated nations such as China and India become more open to global markets, international suppliers will seek to fill their demands. What are some of the things we can expect to see from the global Aerospace and Defense market in the near future?
Recent research performed by Harvard business professors demonstrates that bribery can actually make businesses more efficient. When the red tape is removed, it is amazing how much can be accomplished in a short amount of time. Although there is an element of efficiency introduced by bribery, it is important to understand the implications it has on you and your business. Meet Gagan Sign, a young Indian businessman. When he started his first business at the age of 22, he discovered the hard way that bribery was part of his success, and hated it.
With plans for double digit economic growth each year, India must work quickly to get their infrastructure in shape. Prime minister Manmohan Singh recently stated that he was going to double infrastructure spending from 500 billion dollars to 1 trillion in their five-year plan. Right now the country's poor infrastructure is holding back India's economic development. All-in-all India's highways minglister Kamal Nath set a goal of 20km of roads a day starting in June. That's almost 7,000 km of roads a year! That's an ambitious target but may be something this country needs.
In the early 1990s India was a closed market and it has gone a long way since then to become an important player in the international trade scene. The country is one of the fastest growing economies in the world with a growth rate of 8-10%. This rate in combination with the large market in India makes it a desirable trade partner for many other countries. The European Union, for example, is looking to establish a Free Trade Agreement with India - negotiations started in 2007 and the agreement is expected to be finalized by the end of this year according to EU trade commissioner Karel De Gucht.
Do you want to go out to eat? People around the world are saying “yes” to this answer, but are finding different venues to satisfy their hunger. In fact, you might be surprised to hear that 20% of the world’s food venues are street vendors! Did you know that of the 10 largest markets in the world in the food services industry, five are in East Asia? The industry is making some major shifts which are also specific to geographic location.
Kerala is known all over the world for its lush landscapes, sunny beaches, and peaceful and pleasing backwaters. It also defies the stereotypical Indian state. This state has a lot going for it, and the following just touches the surface:
- The highest human development index in India
- The highest literacy rate (more than 90%) and life expectancy, lowest infant mortality and the lowest school drop-out rate in all of India
Tourism is an area that many countries have been looking at in order to expand their economies and generate more revenues.
A country that recently has decided to expand its tourism industry is India as shown by a BBC video. The country is viewing it as a main generator of future growth. Some important issues that the government needs to address are the lack of enough tourist attractions, and more importantly, to identify its target market. An important question is whether the country will focus on attracting holidaymakers or luxury travelers. This is the first of many choices that need to be made in order for tourism in India to become one of the country's main industries.
It's time for more market briefs! This time, Doug Barry, of the U.S. Commercial Service, conducts two interviews. The first is with Aileen Crowe Nandi, the principle commercial service officer in Chennai, India. In the interview, Ms. Nandi describes the ample number of opportunities for U.S. businesses in the southern region of India (Hyderabad, Bangalore, and Chennai). She also discusses a number of other issues, including cautionary advice for U.S. firms looking to do business in South India, the necessity of being able to compete in an industry based on price, the current infrastructure and consumer base of South India, how these are shifting, and how these shifts should affect the approach when entering into the South India market.
For years, Cricket has been India’s most popular sport, with millions of people following and supporting the teams. In India, Cricket has a value of over $1 billion! However, football fans, and value, are growing in numbers as well. Football is valued at roughly $65 million. The sport still has quite a ways to go to catch up with Cricket, but the die hard fans in the northeast part of India are trying to make that happen.
In recent news, the world’s second largest retailer, Carrefour, has elected to invest further in its international investment. Known for stringent regulations in the retail industry, India has traditionally protected the smaller, independent markets and local communities that run them. Carrefour’s entrance provides a great case study of the importance of understanding the international market where a firm expands. Lets take a brief look at the conditions in India that Carrefour became familiar with before “cracking the code."
Recently, P.S. Surana, founder of Surana & Surana International Attorneys, released the book, “Uruguay-India: on trade and links.” In the book, he states that Uruguay presents a “wonderful, little explored opportunity for Indian businessmen.” Is there any truth to this? And if so, what makes Uruguay and India so right for one another for trade opportunities?
International expansion is certainly no small task for companies around the world. Recently a success story of a Dome manufacturer highlights a few lessons that can be applied to any product or industry. Domes International is a United States-based firm that manufactures round structures molded out of fiberglass. They are used in a variety of applications including housing, offices, schools, military barracks, and warehouses.
In India today, there is a plentiful supply of up-and-coming entrepreneurs. With the advent of microfinance, less privileged communities throughout the world are given opportunities to start businesses in conditions that would otherwise be impossible. So, what is microfinance? Microfinance is the practice of making credit available to individuals in the form of small loans, who would otherwise not have the required income or collateral. The loans generally require in-depth involvement by both the lender and other community members.
Imagine walking into a car dealership and seeing a brand new car with $2,000 written on the windshield in huge neon letters. It seems too good to be true right? Well in India this actually happens. Tata Motors is an Indian automaker that produces the world's most inexpensive car – the Nano.
India is becoming known today as an economic powerhouse for sectors ranging from manufacturing to outsourced business services. The diversity of capabilities is unique and varies from one part of the country to another. Today, the focus will be on Southern India, where industries include automotive components, textiles, IT, chemicals, and many more.
With raw sugar prices soaring to a high of 24 cents per pound and the possibility of rising to 30 cents per pound, Brazil, the largest sugar-cane growing area in the world, has a few options. Brazilian factories can either continue producing ethanol, which is used for more than 90% of new cars in Brazil, or they can produce sugar, which can be sold 40% above cost.
South Korea and India recently signed a free trade agreement. The comprehensive agreement is the first of its kind for South Korea with any of the BRIC countries, and the first of its kind for India with any major economy. The implications of the deal on the global business world are substantial:
The U.S. commercial service specializes in helping U.S. businesses expand internationally. Recently, they posted three interviews on their website which focus on business opportunities in India. If you are even considering India as a potential market, you should take a minute to learn from the experiences of people in these interviews.
India's younger population is growing quickly, and with that comes a greater demand for energy. Despite an ambitious rural energy program, 400 million people still live without access to elecricity. Approximately one-third of the world's urban residents live in slums. In the city of Mumbai, about half of it's residents (roughly 8 million people) live in these slums. Access to electricity can raise the quality of life dramatically, where now it is hard to do simple tasks such as reading and cooking. Many families must choose between putting food on the table or keeping the electricity running. The desperation resulting from this situation has led to a major problem of people stealing the energy.
A few days ago, Tata Motors of India introduced the commercial version of the Nano, a tiny ten-foot-long five-foot-high compact car which the company hopes will revolutionize transportation not only in India, but in other parts of the world too. The car will sell for roughly 100,000 rupees ($1,979; £1,366) and goes on sale next month.
You may know that Michigan State University (this blog is managed by MSU's international business center) is known for its excellence in Supply Chain. As a result, we here even dream in Six Sigma! And an error rate of 1 in 6 million is a dream come true! Watch a short video about the "dabbawalas" in Mumbai and the near perfect lunch delivery service they provide:
We wanted to let you know about a free global virtual seminar on business strategies for China & India and how to leverage these economies for global advantage. This webinar is organized by ICA (India, China and America) Institute, a non-profit research institute working to foster research and dissemination of knowledge on the rise of China and India and their impact on global markets, global resources and geopolitics of the world.
We have all heard that the diamond is a woman’s best friend. The shiny rock has been providing income for many families and it has been a profitable industry for a long time. However, even the diamond industry is not economy proof. India has been one of the world’s biggest exporters of diamonds for many years. The country makes over four billion dollars from diamond exports each year. This year however, instead of an increase in profit from the diamond industry, India sees an increase in suicides because the industry is not doing well thanks to the global recession that has been the reason for many to lose their jobs. As of December 30th, there have been nine reported suicides of depressed diamond workers in the past 15 days in India. The situation has become so grave that NGO’s that have been previously working with HIV/AIDS affected people, have now started to counsel diamond workers on livelihood.
President Bush achieved one of his top legislative priorities Wednesday, but the magnitude of the occasion may have been obscured by other news. What I’m referring to, of course, is the US-India civilian nuclear agreement.
The nuclear deal is the culmination of an initial joint statement between President Bush and Indian Prime Minister Manmohan Singh, which was signed in 2006. For the past two years President Bush and Prime Minister Singh have trudged through domestic opposition, international hurdles, and legal bureaucracy to produce a finalized agreement. The pact allows full nuclear cooperation between the United States and India, as well as opening up the Indian market to US nuclear technology suppliers. The necessity of the seal of approval by the Nuclear Suppliers Group also makes it a de facto recognition of India’s status as a legitimate nuclear power, despite their abstinence from the NPT.