India-U.S: Emerging Opportunities and Growing Synergies
Let me begin by thanking Mr. David Nelms for his warm words of welcome. It is pleasure for me to be in Chicago. I would like to most sincerely thank the Executive Club of Chicago for inviting me to share my thoughts at this event being held as part of its centennial celebrations. This is a celebration of your achievements and enterprise. In our bilateral context, it is also a recognition of your key role in fostering strong India-US trade and commercial engagements.
2. I would also like to express my appreciation to the Federation of India Chamber of Commerce and Industry and Consul General Mukta Tomar for having worked with unwavering commitment to make today’s business Summit possible.
3. Earlier in the morning, you had an opportunity to listen to the Commerce and Industry Minister of India on recent advances in trade and economic ties between world’s two leading democracies. Last evening, the Minister of Power of India, Mr. Sushil Kumar Shinde, outlined the opportunities in the power sector in India. Later in the afternoon, you would have an opportunity to listen about business and investment opportunities in the domain of Renewable Energy from Minister Farooq Abdullah.
4. I would like to share with you my appreciation of the key drivers of our overall relationship, its dynamics; and my view on how the evolving businesses and technology partnerships between our two countries are a crucial component of our relationship.
5. Let us try to understand the main elements that form the framework of expanding India-US strategic relationship.
• Firstly, the structural construct of India-US partnership is based on shared values of democracy; pluralism; openness; respect for fundamental freedoms; tolerance and a sense of enterprise.
• Secondly, both share a common and strategic interest in seeking to ensure peace and stability in a rapidly changing Asia and the world; in stemming and reversing the tide of extremism and terrorism; and addressing a range of global challenges facing the international community from humanitarian disasters to combating piracy and keeping sea lanes of communication safe and secure.
• Third, the dynamism of our relationship to respond to the global challenges with a view to achieving our shared interests in securing peace, economic growth and development.
• Fourth, situating of our ties including trade and commercial linkages in the backdrop of overall emerging trends of globalization including a clear shift towards the East in the emerging global economic landscape.
6. Over the past ten years, the canvass of India-US partnership has widened immensely in its scope and content. The signing of the India-US civil nuclear agreement signaled a new bold thinking in our ties. It is a reflection of growing mutual confidence and investment in a long-term strategic relationship that our discussions today are more candid and are aimed at finding 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, science and technology and business linkages. Today, we consult and cooperate on many regional and global challenges of the 21st Century.
India’s growth: New opportunities
7. Let me turn to the economic component that has been the central driving force in the growth of India-US partnership. A key catalyst of ever increasing India-US trade and commercial engagement is the changing face of India and its economy. Main aspects of India’s growth and development story that have contributed to constructive India-US engagement would be:
• its ability to withstand the global economic pressures in the last couple of years;
• domestically driven growth;
• large market size;
• strong demographic dividend and inherent opportunities in it for greater business to business cooperation across a range of sectors; and
• our desire and concerted efforts to develop India as a global innovation and knowledge hub.
8. 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 about US$ 1.7 trillion, we are expecting to be a US$2 trillion economy in coming few years.
9. While figures of economic growth tell one side of the picture, the other aspect comprises of real life changing stories of entrepreneurship and innovation in product development and service delivery that are re-shaping the policy approaches in which India would address its developmental priorities in coming years. While products like ‘Nano’, developed through the first principles of engineering, also known as frugal engineering are well known, there are several other examples of the lesser known but potentially significant and commercially viable products and technologies that open up new vistas of cooperative possibilities in doing business in India. These include low cost water purifier, cooling systems that are essentially designed to address the need of millions of households in rural areas. In the field of health care, Indian companies have managed to produce low cost vaccine for Hepatitis B that is about 30 times less expensive than in the United States. The vibrancy of Indian market with focus on innovation and technology offers viable commercial opportunities for international businesses.
10. I am happy to note that the US and Indian companies, including several companies from the mid-West, have already realized the scope of opportunities inherent in India’s innovation economy and as a result there have been several examples of mutually beneficial partnerships. For the US businesses, commercial opportunities in India have also proved to extremely profitable, not only in the monetary sense but also in the realm of business development and global competitiveness of US companies. Most U.S. companies assess that their business in India is grossing high profits, not only in the short term but also over the 5-10 year horizon. Almost all top U.S. companies have thriving Research and Development Centers in India. Out of Fortune 500 companies, around 200 have set up R&D centers in India.
India-US trade and investment engagement
11. India’s growth and development of its manufacturing and services sector has also been a positive factor in fast growing India-US trade and commercial engagement. If one looks at figures, one can see the distance we have travelled in our trade relationship. In the early 90s, India-US annual trade was around US$ 5 billion. In 2010, our bilateral trade stood at US$ 48.75 billion.
12. An interesting, though not much talked about part of our trade story is that strong growth of the Indian economy has caused the US exports to India to be one of the fastest growing compared to other destinations globally. In the last decade, US exports to India have grown by over 200%. During President Obama’s visit alone, the US companies secured export orders worth US$ 15 billion in the fields of defense, civil aviation, home land security, power generation, mining equipment, telecom, medical research, low cost housing, IT products, and technology solutions and health care equipment.
13. We also have a strong services trade of around US$ 38 billion. I believe that the private sector constituents on both sides have a responsibility to ensure that goods and services trade is not adversely impacted by increasing protectionist tendencies especially those relating to the movement of professionals.
14. Of course, trade and investment go hand in hand. The United States has long been one of the leading sources of investment flowing into India. A fast developing feature of our growing business linkage is creation of value and jobs in the US economy by the Indian investments. Indian companies are now invested in more than 40 US States. In addition to contributing to the US economy, they have been responsible corporate citizens, with active involvement in the society. They partner with Universities; they are involved in social charities; they host local school students for computer education; and they also sponsor marathons including the New York and Boston marathons.
15. Ladies and Gentlemen, as representatives of Industry, you are well placed to assess the ground situation well yourself. Still, let me mention some of the key areas where I see tremendous synergies for cooperation. These might resonate with your business priorities, and they are also in line with our national development priorities.
15.1 Collaboration in the energy sector is the first to come to my mind. The multi-pronged approach of promoting clean energy, renewable energy and energy efficiency informs all the actions of the Indian government. Today, renewable power capacity accounts for 8% of total installed capacity in the country. We are determined to develop our solar energy and have also launched a National Solar Mission. I invite you to participate in this field which offers exciting commercial opportunities. You will hear more on India’s goals and business opportunities in this field from Minister Abdullah later during the day.
15.2. The next area I would like to mention is agriculture and allied technologies. To be sustainable, growth has to be inclusive. Therefore, we have to bring the fruits of development and globalization to the millions of people in rural areas drawing their livelihood from agriculture. The United States helped bring about India’s first green revolution. We seek your cooperation to usher in a second one.
15.3 Equally important for sustained high economic growth development is infrastructure. The government has placed special emphasis on modernizing infrastructure - both urban and rural. We have an investment requirement of over US$ 1 trillion over the next five years to build our infrastructure. We are prepared to work with you to address any gaps in the investment environment in this field. Indian government has most recently floated the Infrastructure Debt Fund as one of the creative ways to address the challenge of huge funding needs in this field.
15.4. Another set of opportunities that I would like to point to are those created by, what I would call, the Demographic Imperative. In India, more than 50% of the population is below 25 years. If this population is healthy, trained, and educated, it becomes an asset not just for India but to the world. The ambit of the demography-related opportunities spans services sectors such as health, education, technology, cross-sectoral research, design and development.
15.5. The healthcare sector offers tremendous opportunities for mutually beneficial collaboration. With closer collaboration between the pharmaceutical companies in research, development and manufacturing, complemented by cooperation between the relevant regulatory agencies in the two countries, I am confident that cheaper but safe healthcare solutions could be found that would benefit not only India but also the United States; and indeed the world. This has happened for vaccines already, let us widen the circle.
15.6 As we seek to meet our developmental goals, our domestic demand for products and services would only increase. According to some estimates, the middleclass in India is expected to increase to over 500 million in the next 20 years. It is, however, important for the international businesses to approach the Indian market from long term perspective, rather than as a short trading opportunity.
16. To promote synergies between international businesses and opportunities in India, on our part, we are determined to put in place a policy framework which facilitate foreign participation. We are ready to address all issues in a transparent manner with a ‘can do’ mindset. We will value your input and advice as we move ahead. In fact, the involvement of the private sector in some of our key bilateral forums has provided new vigour to the whole process.
17. Let me conclude by saying that India stands today on the cusp of great change. The growing Indian economy will continue to offer vast commercial opportunities for growth of international businesses. Amidst current global economic uncertainty, India’s growth offers stability and predictability to your business models. As business enterprises it is for you to leverage and harness these opportunities. In this endeavour you will find Indian businesses as reliable partners who are looking to forge strong technology and investment partnerships in the United States.
18. I invite you to take advantage of these new opportunities in India; make it the centre of your global manufacturing; a delivery point for your international services to your clients worldwide; a hub for research and development of your globally competitive innovations in products and technologies; and develop mutually beneficial partnerships to harness the benefits of growing and vibrant Indian market.