Prime Minister Vajpayee's address at the U.S.-India business summit

Washington, D.C.
September 15, 2000

I am happy to participate in this business event organized by the National Association of Manufacturers and the Confederation of Indian Industry.

My interaction with industry began in New York. It is in the fitness of things that it concludes in Washington. It comes towards the end of my visit to the United States. This interaction convinces me that there is great scope for economic partnership between India and the United States.

In March this year, President Clinton and I had signed a Vision Statement on Indo-US relations in New Delhi. That Statement had pledged to make a new beginning for India and the United States to realize the full potential of our relationship.

I came here to carry this process further. I came to explore the opportunities for realizing this full potential of our partnership.

The Joint Statement issued today reinforces this. It reflects the considerable progress made between the two countries even in a short period of six months.

Economic and business cooperation is the critical pillar of our relations. Business within and between nations is not only about market share and margins. It is prompted by mutuality, fostered by partnership and realized through trust.

All commerce is an endeavour to enhance human comfort.

All investment is an investment to promote human happiness.

All development is about improving the quality of life.

Both for India and the United States this is the vision for any development process. Distinguished businessmen, you have a noble calling to realize this common vision.

The continued US prosperity is almost a miracle. Your economic performance has evoked global admiration. It has also inspired India.

We are gratified that the Indo-Americans have made an important contribution in your economic success. Their significant achievements in Information Technology are a glowing chapter in the growth of the "New Economy".

Less well known than the stellar performance of the US economy is the story about the Indian economy. At an average GDP growth of 6.5% per annum, India in the Nineties has been among the ten fastest growing economies of the world.

We want to do even better in the decade that has just begun. We have pledged to double our per capita income in the next ten years. This implies a growth rate of around 9%.

Although it is a difficult challenge, India can achieve it. India will achieve it.

In the last decades of our development, we have built a strong and resilient India. But we have also drawn lessons for the future. We have re-thought about the respective roles of the State and the private sector for economic development.

The first point of change has been to free Government from providing private goods and services to use its resources to provide public goods. This has involved far reaching changes in fiscal, financial, social and institutional arrangements. While significant progress has been made, considerable work remains to be done.

Second – to create an environment where private initiative can flourish and where entrepreneurship and innovation rewarded. That is why through progressive liberalization we are expanding business opportunities – both domestic and foreign.

Rules, procedures and policies which hinder private initiative are being changed or re-adapted. In the process, reforms have touched most areas of the economy industry, infrastructure, international trade, foreign exchange market, financial system and taxation.

Let me enumerate some of our important initiatives.

We shall complete a project to build 13, 000 kms of improved and expanded National Highways by 2007. The first component of 7, 000 kms, involving the four major metros, would be completed by 2003 itself.

A massive rural road connectivity programme to connect all the villages with populations of more than 500 with all-weather roads by 2007. An accelerated programme is being worked out to connect villages with populations of more than 1000 by 2003.

The deregulation in the area of telecommunications is more or less complete.

• We have fully liberalized National Long Distance, Basic Telephony and under-sea optical cable.
• We are considering how best to fully deregulate cellular telephony.
• The monopoly of the VSNL will end by nearly 2002.
• The new Telecom Convergence Bill is in the offing.

Our Internet Service Policy is about the most attractive anywhere in the world. We are placing emphasis on human resource development to support our IT Policy. We propose to dramatically increase the number of IT professionals in the next two or three years.

In this context, I applaud the initiative taken by a group of successful Indian-Americans to set up a Global Institute of Science and Technology in India in collaboration with University of California, Berkeley.

Financial sector reforms are being continued. New measures are being adopted to minimise the Non-Performing Assets.

• We have opened up the insurance sector. The Insurance Regulatory Authority informs me that the first batch of private licences will be issued by the first of October this year.
• The Reserve Bank is willing to consider further expansion of foreign private banks in India.
• Our tax rates are moderate and compare with the best you have anywhere in the world. We recognize that further tax reforms are necessary. We have, therefore, decided to constitute a Tax Reforms Commission to lay down the roadmap of further tax reform and what is more, reform tax administration.
• In the Joint Statement, we have decided to modify the Double Taxation Treaty so that on a reciprocal basis some of the present tax irritants on both sides can be eliminated.

A new Civil Aviation policy is on the anvil. This would be based on the principle of making India an easier destination. It would not be driven by a mere bilateral consideration of trade-off in slot sharing. I am sure that this will enable American and other foreign airlines to bring more flights, and business, to India.

Disinvistment of Government’s holding in Air India is well on course. The necessary advertisement will be issued within a fortnight’s time.

Milestones have been determined for long-term lease of our five major international airports.

The corporatization of ports and private participation in port building is being aggressively encouraged.

We need to attract large investments in the power sector. We shall speed up reforms in this crucial sector, both at the Centre and in the States. We now have a regulatory framework that depoliticises the fixation of tariffs. This has been emulated by 14 State Governments. Financial institutions have worked out alternative arrangements that will enable them to lend more easily.

Yesterday we have signed four large power projects involving an investment of nearly 7 billion dollars. The next few months will see the financial closure of many power projects, which have been languishing for several years.

On Foreign Direct Investment, our policy is to make our climate more hospitable and competitive. The approval process for Foreign Direct Investment is more or less automatic for most types of investments.

Even last week, we have substantially relaxed sectoral caps in respect of a number of areas. We believe that India needs large flows of capital and technology to achieve the required growth targets. The thrust of our policy will be automaticity, transparency, simplicity, speed and removal of conditionalities.

The disinvestment and privatization programme of a large number of public corporations and selected utilities is moving ahead with full speed. Only a week ago, we have finalized definite milestones that will enable the privatization programme to cover many large undertakings.

We confront major challenges. There are many problems to be resolved. There are issues concerning fiscal rectitude. We are determined to ensure that the reforms benefit the average man. We have also resolved to address social concerns like rural connectivity, housing, drinking water, primary education and health. These will further expand the social base of prosperity in India.

Distinguished businessmen, Corporate America has reaped the rewards of a record ninth year of domestic economic expansion. Today, I invite you, captains of US industry, to grasp many new opportunities India offers. Your choice is diverse. It ranges from infrastructuring to manufacturing, from financial services to knowledge-based enterprises.

Let us forge a new economic partnership. A partnership reinforced by a common desire to derive mutual benefit.

I look forward to this US-Business India Summit heralding a new era of business to business relationships. An era that will bring growth, prosperity and liberation from deprivation.

Thank you, Ladies and Gentlemen, for enabling me to share that vision of a better tomorrow.