Special Address by Ambassador Nirupama Rao at the India Investment Forum on India’s growth and expanding opportunities for India-US economic partnership
Ladies and Gentleman,
It is a privilege and honour to address the annual gathering of India Investment Forum this morning. For successive years, the Forum has done a commendable job in situating India’s growth story in terms of investment opportunities available for the US business community in India. I would like to thank the Federation of India Chamber of Commerce and Industry and the Institutional Investor for inviting me to address this Forum on the opportunities that India’s economic growth offers for greater India-US engagement.
You have had an opportunity to listen and to interact with a number of distinguished participants from India and the US during the last two days on India’s growth story, what is driving the Indian economy, its economic fundamentals, the challenges and new and exciting investment opportunities that the growing Indian market has to offer to business community world wide.
I would like to share my thoughts with you on the key catalysts of the India-US relationship and how sustained economic growth in India opens up new vistas of business and technology collaboration between our two leading democracies.
Key catalysts of India-US partnership
Though geographically, India and US are separated by almost ten thousand miles, yet, we are connected in a very direct way by the kind of similarities that we share – our respect for fundamental human freedoms, the rule of law, drive for enterprise and innovation, our culture of debate and discussion, empowering youth and women, our autonomous and democratic institutions and our commitment to open governance and the preservation of the pluralistic and secular nature of our diverse and open societies.
The expanding cooperation between India and the US is strongly rooted in excellent people to people contacts and business linkages and our ability to work together in a variety of fields. We both share a common and strategic interest in seeking to ensure peace and stability in a rapidly changing and inter-connected world; in stemming and reversing the tide of forces of extremism and terrorism; addressing a range of global challenges facing the international community from humanitarian disasters, pandemics, to keeping our sea lanes of communication safe and secure. In my view, these convergences are key catalysts in our expanding bilateral relations. Indeed, they provide foundational template on which we seek to expand our global strategic partnership with the US.
Over the past ten years, the canvass of India-US partnership has widened immensely in its scope and content. Our discussions today are more candid. Besides excellent political level cooperation, we are forging common and new grounds in our cooperative endeavours in different sectors such as frontier science, space, clean and renewable energy, information sharing, military exchanges, defence trade, counter-terrorism, education, health, agriculture, technology and close linkages in the area of innovation, manufacturing and services. Today, we consult and cooperate on many regional and global challenges of the 21st Century. The widespread political support in both countries for a robust bilateral relationship is, to quote our Prime Minister, based on both principle and pragmatism. Bilaterally, our ties have become truly broad-based and enduring.
Having laid out the basic framework which is driving the India-US partnership, let me turn to the economic component that has been the central driving force in the growth of India-US partnership. Indeed, a key driver of ever increasing India-US trade and commercial engagement is the changing face of India and its economic growth.
India’s growth story and expanding India-US partnership
This is an era of transition, where the fast growing resurgent economies across the world are setting a new pace and direction in regional as well as the international growth trajectory. India, with its sustained economic growth, is playing an important role in this transition.
The growth prospects of Indian economy are underpinned by a very favorable mix – the unfolding demographic dividend, the increasing domestic demand, high savings and investment rates, robust capital markets, world class firms in important high tech sectors and the available pool of human resources. It may be worthwhile to point out that the current median age in India is just over 25 years. Over the next several decades, it is reasonable to expect a sharp rise in the work force that shall provide the critical energy and dynamism to sustain the high economic growth path.
With sustained annual economic growth of over 8 % in recent years, the Indian economy offers exciting opportunities for the US businesses to partner with Indian stakeholders for mutually beneficial ties. Currently at more than US$ 1.5 trillion, we are expecting to be a US$2 trillion economy in coming few years. The direction of economic reforms in India remains positive. As a result of the progressive changes introduced in the economic policy matrix, the business climate in India today is much better that it has ever been in the past. The competitiveness level of Indian companies across sectors has improved significantly and many of them are now going abroad to explore new horizons in technology, services and manufacturing partnerships of which the United States has been one of the important destinations.
India's economic progress is not only a key factor for stability in the global economy but also a source of immense economic opportunity for the world. As the high growth trajectory is sustained, there shall be a steady increase in the disposable incomes of the expanding and young work force. With rising real wage, India is poised to become one of the world's largest consumer markets by 2030.
When we talk of India’s economic transformation, we expect India, at an average growth of a minimum of about 8 % growth in GDP per year, to achieve a ten-fold increase in per capita income in the next 30 years or so. We do not underestimate the challenges we face of meeting the education, health, energy and infrastructure needs of our population. For India, while the focus remains on a high growth trajectory, there is a firm commitment to inclusive and sustainable growth in order to lift millions out of poverty.
The ambitious National Action Plan on Climate Change seeks to increase the share of clean and renewable energy in the energy mix and increase energy efficiency across the economy. The Government has launched a National Solar Mission and is committed to establishing a strong manufacturing base in this field. The US-India Clean Energy and Climate Change Initiative to advance cooperation in clean and renewable energy, and energy efficiency is a step in this direction. Solar and Wind energy expansion offers opportunities for green tech companies in US to build long term partnerships with the energy industry in India.
Infrastructure development in new townships is the focus of investment now and would remain so in future. Over the next 10 years, development and modernization of Indian cities - new roads, building ports, airports, augmenting power generation capacities, development of new educational and training facilities for skill-building and upgrading health care systems - would require a capital expenditure of over one trillion dollars. These have the potential to become new ‘growth poles’ for industrial and technology development. Further, high technology applications and diffusion coupled with skilled human resources could transform the services sector in several metros and other vibrant smaller towns in the coming years. This offers huge opportunities for new investments for international businesses.
India’s achievements in the last several years and economic growth have helped shape the contours of India-US ties that have come a long way in a relatively short span of time. It gives me great satisfaction and happiness to see that we have established real momentum in our economic relationship. Our inter-governmental mechanisms; and the private sector participation in most of them is vibrant and purposeful. Two-way trade in goods continues to grow steadily and reached all time high figure of about US$ 49 billion last year. Services trade is buoyant; and capital flows are now in two directions. This has translated into not only stronger linkages between the businesses; but has also given rise to new foundations of partnerships in innovation, entrepreneurship, food and energy security. A fast developing feature of our growing business linkage is creation of value and jobs in the US economy by the Indian investments. In addition to contributing to the US economy, they have been responsible corporate citizens, with active involvement in the society.
The US businesses are becoming strong partners in India’s economic growth story; and the Indian businesses creating value, wealth and jobs in the United States. It has been a truly mutually complementary relationship.
India's economic partnership with the United States is built on a strong framework, defined by mutual benefit not mutual vulnerability. Indeed, the innovation, technology development, knowledge partnership, better delivery of services have been hallmarks of India-US commercial engagement. We all have stakes in ensuring that this commercial engagement maintains its positive trajectory and is not affected by any protectionist sentiments.
In our growing and rich agenda of cooperation, I would like to particularly underline the crucial importance of the role played by the private sector stakeholders of the two countries. Institutionally, the CEO Forum, whose most recent meeting was held in Washington yesterday under its co-chairs Ratan Tata and David Cote, is a classic example of the commitment of the two governments to sit with the leaders of the industry on both sides in identifying and prioritizing new areas of corporate partnerships. The productive CEO Forum meeting of yesterday has come up with several interesting ideas for investment-related bilateral cooperation in such areas as Clean Energy, Technology, Health, Agriculture, and Education Trade, Security and Aviation, Trade and Agriculture, and Energy efficient buildings project. I am hopeful that Forum’s suggestions will translate into concrete action in the months to come.
I have been in the US as Ambassador only for about two weeks. But in these few days, I have had an opportunity to interact with a number of US and Indian entrepreneurs. These interactions confirm my belief that the scope for expanding bilateral commercial engagement is immense and yet to realized fully. I invite entrepreneurs from both our countries to harness these synergies and new opportunities to further the cause of peace and prosperity in both our countries. Come and invest in India.
Once again, I am delighted to be here with you today. I have no doubt that the India Investment Forum will become a key annual event where not only a narrative on the potential Indian investment opportunities is given form and content but also where actual investments crystallize. I wish the IIF great success in this initiative.