VZCZCXRO1180
PP RUEHCI
DE RUEHC #0031 0291204
ZNR UUUUU ZZH
P 291222Z JAN 07
FM AMCONSUL KOLKATA
TO RUEHC/SECSTATE WASHDC
INFO RUEHNE/AMEMBASSY NEW DELHI
RUEHBI/AMCONSUL MUMBAI
RUEHCG/AMCONSUL CHENNAI
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHKA/AMEMBASSY DHAKA
RUEHLM/AMEMBASSY COLOMBO
RUEHKT/AMEMBASSY KATHMANDU
RUEHCI/AMCONSUL KOLKATA

UNCLAS SECTION 01 OF 02 KOLKATA 000031 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EAGR ECIN EINV ELAB ENRG IN
SUBJECT: DCM TALKS AGRICULTURE IN WEST BENGAL 
 
REF: CALCUTTA 00017 
 
KOLKATA 00000031  001.2 OF 002 
 
 
¶1.  (SBU) SUMMARY:  DURING HIS JANUARY 18-19 VISIT TO KOLKATA, 
DCM DISCUSSED FOOD-PROCESSING, FDI IN THE RETAIL SECTOR, AND 
LAND POLICY WITH COMMUNIST PARTY OF INDIA - MARXIST (CPM) AND 
GOVERNMENT OF WEST BENGAL (GOWB) LEADERS.  THOUGH GOWB OFFICIALS 
WERE GENERALLY POSITIVE ABOUT THE STATES PROSPECTS FOR 
INDUSTRIALIZATION, PROBLEMS OF LAND ACQUISITION WILL REMAIN A 
CONTENTIOUS ISSUE FOR THE GOWB IN THE COMING YEAR.  STATEMENTS 
BY THE DCM AND UNION MINISTER FOR FOOD PROCESSING SUBODH SAHAY, 
EMPHASIZING STEPS FOR GREATER INDO-U.S. COOPERATION IN THE 
FOOD-PROCESSING SECTOR, RECEIVED A STRONG WELCOME FROM THE 
BUSINESS COMMUNITY.  END SUMMARY. 
 
¶2.  (SBU) ON JANUARY 18-19, DCM VISITED KOLKATA TO DELIVER A 
SPEECH ON USG POLICIES IN AGRICULTURE BEFORE THE INDO-AMERICAN 
CHAMBER OF COMMERCE (IACC), INAUGURATE A NEW BUSINESS SURVEY BY 
THE AMERICAN CHAMBER OF COMMERCE KOLKATA CHAPTER AT THE NATIONAL 
BOARD MEETING, CONDUCT A PRESS CONFERENCE ON TRAFFICKING IN 
PERSONS, AND TO GAUGE GOWB PROGRESS ON ECONOMIC ISSUES.  THE DCM 
MET WITH COMMERCE AND INDUSTRIES SECRETARY SABAYSCHI SEN AND 
SPOKE WITH CHIEF MINISTER BHATTACHARJEE AT THE IACC SEMINAR.  ON 
LAND ACQUISITION, PARTICULARLY AFTER OPPOSITION TO A NEW TATA 
CAR FACTORY IN THE RURAL SINGUR DISTRICT, SEN SAID THAT THE CPM 
HAD LEARNED A FEW LESSONS (REFTEL).  MOST IMPORTANT WAS TO FULLY 
CONSIDER THE RANGE OF INDIVIDUALS WITH A VESTED INTEREST IN THE 
LAND, ESPECIALLY THE BARGADARS (SHARECROPPERS) WHO HAD CLOSER 
TIES TO THE LAND THAN THE OFTEN ABSENT LANDOWNERS.  SEN SAID 
THAT THE GOWB MUST EXPLAIN TO THE BARGADARS THE POTENTIAL 
BENEFITS OF NEW PROJECTS AND PROVIDE A "FULL POLITICAL ROADMAP 
FOR FUTURE GAINS" THAT WOULD INCLUDE A REHABILITATION POLICY AND 
ALTERNATIVE LIVELIHOODS PROGRAMS FOR FARMERS.  THE BARGADAR, NOT 
THE LANDOWNER, SHOULD ALSO RECEIVE 75% OF THE COMPENSATION FOR 
THE LAND IF THE BARGARDAR PROVIDED THE MAJORITY OF INPUTS, SUCH 
AS SEED AND FERTILIZER. 
 
¶3.  (SBU) SEN PREDICTED THE LAND DEBATE IN W. BENGAL, WHICH TO 
HIS MIND "HAS ONLY ONE ANSWER," -- THAT OF MORE LAND FOR 
INDUSTRY -- WOULD CONTINUE FOR ANOTHER YEAR IN THE RUN UP TO 
LOCAL PANCHAYAT (VILLAGE) ELECTIONS IN MARCH 2008 WHICH WOULD 
SERVE AS A REFERENDUM ON CHIEF MINISTER BHATTACHARJEE'S 
INDUSTRIAL POLICY.  THE GOWB WOULD SPEND THE NEXT 5-6 MONTHS 
CONSENSUS BUILDING ON LAND POLICY, AND THEN LET THE LAND ISSUE 
QUIET DOWN UNTIL THE ELECTIONS TOOK PLACE.  CONFIDENT THAT THE 
CHIEF MINISTER'S VIEWS WOULD WIN THE DAY, SEN NOTED THAT BOTH 
JAPANESE AND CHINESE INVESTMENT WERE COMING TO THE STATE, AND 
THAT COMPLETION OF THE NATIONAL HIGHWAY PROJECT IN W. BENGAL 
WOULD BRING FURTHER URBAN GROWTH AND POSSIBLY INTEREST BY OTHER 
ASEAN NATIONS SUCH AS SINGAPORE AND S. KOREA. 
 
¶4.  (SBU) SHIFTING TO THE POSSIBILITY OF WAL-MART COMING TO W. 
BENGAL AS PART OF THE BHARTI PARTNERSHIP, SEN STRESSED THAT 
NOBODY IN W. BENGAL WAS AGAINST WAL-MART PER SE.  HOWEVER, SEN 
SUGGESTED THAT WAL-MART PIGGYBACK ON BHARTI'S ENTRY INTO THE 
STATE TO FACILITATE THE PROCESS.  AS FAR AS THE GOWB WAS 
CONCERNED, IF THE GOI GAVE WAL-MART PERMISSION TO ENTER THE 
COUNTRY, THEN WAL-MART COULD SET UP IN W. BENGAL.  (NOTE: 
DURING HIS VISIT, THE DCM ALSO CALLED UPON CPM POLITBURO MEMBER 
BIMAN BOSE AT CPM PARTY OFFICES AT ALIMUDDIN STREET.  BOSE 
VOICED OPPOSITION TO FDI IN RETAIL, INCLUDING WAL-MART, BY 
ARGUING THAT THERE WERE MANY PEOPLE WORKING IN THE 
PRODUCER-CONSUMER CHAIN, AND THAT ENTRY BY FOREIGN RETAILERS 
WOULD CAUSE THE "INTERMEDIATE CHAIN" TO COLLAPSE AND HIGH 
UNEMPLOYMENT.  DOMESTIC RETAILERS, HOWEVER, WERE ACCEPTABLE. 
BOSE'S COMMENTS DEMONSTRATE THE DISSONANCE THAT REMAINS WITHIN 
THE CPM OVER ITS VIEWS ON FDI AND PRIVATE SECTOR DEVELOPMENT. 
END NOTE.) 
 
 
¶5.  (U) ON JANUARY 19, THE DCM, UNION MINISTER FOR FOOD 
PROCESSING SUBODH SAHAY AND CHIEF MINISTER BHATTACHARJEE 
ADDRESSED THE IACC AT A SEMINAR ON "EMERGING INDO-US TRADE 
OPPORTUNITIES IN FOOD PROCESSING - SPECIAL FOCUS ON THE EASTERN 
REGION."  THE DCM UNDERLINED THE IMPORTANCE OF THE AGRICULTURAL 
KNOWLEDGE INITIATIVE (AKI) AND SUGGESTED AREAS WHERE THE U.S. 
AND INDIA COULD CREATE PARTNERSHIPS IN DEVELOPING INDIA'S FOOD 
PROCESSING SECTOR, CITING PEPSICO'S FRITO-LAY PLANT IN W. BENGAL 
AS A MODEL FOR OTHERS.  MINISTER SAHAY COMMENTED THAT THE 
BHARTI/WAL-MART AGREEMENT SHOWED THAT JOINT VENTURES COULD BE 
SET UP IN THE INDIAN RETAIL SECTOR.  SAHAY PRAISED THE AKI 
INITIATIVE, AND ASKED THE CHIEF MINISTER FOR HIS COOPERATION IN 
ENSURING FURTHER GROWTH IN FOOD-PROCESSING.  SAHAY FURTHER 
REQUESTED THE CHIEF MINISTER TO PAY A VISIT TO THE UNITED 
 
KOLKATA 00000031  002.2 OF 002 
 
 
STATES, TO WHICH HE REPLIED, "WE ARE PREPARING SUCH A VISIT." 
SPEAKING PRIVATELY WITH THE DCM, CHIEF MINISTER BHATTACHARJEE 
EXPRESSED GREAT SATISFACTION WITH PEPSICO'S ROLE IN WEST BENGAL, 
AND THE FACT THAT THIS INVESTMENT WAS BOOSTING AGRICULTURAL 
DEMAND AND GENERATING LOCAL EMPLOYMENT.  HE CITED THREE 
PRIORITIES HE WOULD LIKE TO ACCOMPLISH IN CONJUNCTION WITH 
TRAVEL TO THE US: BOEINGS INVESTMENT IN THE MAINTENANCE 
FACILITY AT KALIKUNDE, DOW'S INVESTMENT IN THE HALDIA 
PETRO-CHEMICAL COMPLEX, AND PROGRESS IN AN AGRICULTURAL RESEARCH 
PROJECT INCLUDING SCHOLARS AT UC BERKELEY.  (COMMENT:  THE 
STANDING-ROOM ONLY CROWD AT THE IACC SEMINAR RESPONDED 
ENTHUSIASTICALLY TO THE USG/GOI PUSH FOR PROGRESS IN FOOD 
PROCESSING.  AFTERNOON TECHNICAL SESSIONS WITH INVESTORS, 
ANALYSTS, PRIVATE AND PUBLIC SECTOR REPRESENTATIVES WERE 
WELL-ATTENDED, AS WAS AN INDIAN CHAMBER OF COMMERCE SEMINAR ON 
INTEGRATED VALUE CHAIN MANAGEMENT FOR THE INDIAN FOOD PROCESSING 
INDUSTRY, HELD THE FOLLOWING DAY.  END COMMENT.) 
 
¶6.  (SBU) COMMENT:  THE COMMUNIST BASTION OF W. BENGAL IS AN 
EARLY LEADER IN FACING A FUNDAMENTAL ISSUE OF PROMOTING INDUSTRY 
AGAINST A BACKDROP OF GREAT RURAL POVERTY - A SITUATION THAT 
CONFRONTS INDIA IN GENERAL.  THE CPM IS EXPERIENCING A SERIOUS 
INTERNAL CONFLICT FOLLOWING THE RECENT VIOLENCE IN SINGUR AND 
NANDIGRAM AND POTENTIALLY GROWING DISAFFECTION IN ITS 
AGRICULTURAL BASE.  IN EFFECT, THE CPM-LED GOWB IS IN A RACE TO 
REALIZE THE BENEFITS OF ITS INDUSTRIALIZATION POLICIES BEFORE 
THE DISAFFECTION WITHIN THE RURAL SECTOR CREATES A BACKLASH 
SUFFICIENT TO BLOCK EFFORTS AT MOVING THE MANY PEOPLE OUT OF THE 
INEFFICIENT AGRICULTURAL SECTOR INTO MANUFACTURING AND SERVICES. 
 AKI, PROGRESS IN FOOD PROCESSING AND EVEN POSSIBLY EXPANSION OF 
LARGE-SCALE RETAIL OFFER POTENTIAL SOLUTIONS TO EASING THIS 
ROUGH PERIOD OF ECONOMIC TRANSITION, IN CREATING GREATER 
EFFICIENCIES, VALUE ADDITIONS AND ECONOMIES OF SCALE.  THE DCM'S 
EXHORTATIONS ON THESE ISSUES WERE WELL RECEIVED BY MEMBERS OF 
THE IACC, THE MINISTER FOR FOOD PROCESSING AND EVEN CHIEF 
MINISTER BHATTACHARJEE.  THE QUESTION REMAINS, THOUGH, WHETHER 
OLD-LINE COMMUNISTS AND OPPOSITION FIGURES WILL STALL THE GOWB'S 
ECONOMIC POLICIES, WHILE CLAIMING TO ADVOCATE FOR THE INTERESTS 
OF THE RURAL MASSES AGAINST BIG INDUSTRY. 
JARDINE