IV.  Political environment

Bilateral relationship with the U.S.

India and the United States enjoy improving relations
in the post-cold war era.  Burgeoning commercial ties
between the world's two largest democracies are
spurring the two governments to work for greater
cooperation on difficult bilateral and global issues,
including non-proliferation, human rights, and trade
issues.  The qualitative change in the relationship is
reflected in a series of recent high-level exchanges
between the two governments, including the may 1994
visit of Prime Minister Rao to meet President Clinton
at the White House and the March 1994 visit of Deputy
Secretary of State Talbott to New Delhi, his first
after taking office.

Major political issues affecting the business climate

Prime Minister Rao's tenure has been marked by his
sweeping economic reform program, launched in 1991,
which is moving India from a planned to a market
economy.  We believe these reforms are likely to
continue for the foreseeable future, although their
pace already has been slowed as many hurt by the
reforms and Rao's rivals continue to wield considerable
political clout.  Somewhat mitigating this otherwise
"business-friendly" environment are India's
stultifying, and still largely unreformed, bureaucracy;
New Delhi's ongoing dispute with Pakistan that has
resulted in three previous wars; and caste and communal
tensions that have worsened, sometimes violently, in
recent years.  Nevertheless, on balance, India is
becoming an increasingly attractive business
environment and most industrialized nations are rapidly
expanding their commercial presence in the country.

Brief Synopsis of the Political System

India is a multi-ethnic, multi-religious, federal
republic composed of 24 states and 7 union territories.
The country has a bicameral parliament--including the
Upper House, the Rajya Sabha (government assembly), and
the Lower House, the Lok Sabha (people's assembly).
The judiciary is relatively independent and the legal
system is based on English common law.  National and
state elections are ordinarily held every five years,
although they may be postponed in an emergency and may
be held more frequently if the government loses a
confidence vote.  The last national election, held in
1991, returned the Congress (I) party--which has ruled
india for almost all of its independent history-- to
power.  Current Prime Minister and Party Chief P.V.
Narasimha Rao, however, is only the second Congress(I)
leader not from the Nehru-Gandhi dynasty which
controlled the party until Rajiv Gandhi's assassination
in 1991.  The major opposition party, the Bharatia
Janata Party is a rightist, Hindu-chauvinist party that
emphasizes indian nationalism.  The BJP has supported
market reforms and claims to favor closer relations
between Indian and the United States.  The next
national elections are scheduled in 1996, but an
important series of state elections will be held in the
fall and winter of 1994-1995.