May 30, 2012
Mr. Shuja Nawaz, Director, South Asia Center,
Mr Nelson Cunningham
Ladies and Gentleman,
Thank you for inviting me this evening to the Atlantic Council to speak about our relations with the United States. It is a special privilege to come to the Council when it is celebrating 50 years of its establishment. And during these five decades, besides promoting transatlantic cooperation, the Council has provided an excellent forum for dialogue and debate on a range of global issues all with the aim of fostering cooperation and mutual understanding. We especially appreciate the fact that the South Asia Center has promoted scholarship on issues relating to India and the South Asia region and has brought voices of the region to Washington and the larger world community.
I am here today to speak to you about the India-US relationship at a time when we are to hold the next round of the Strategic Dialogue between our two countries in a fortnight from now. The India-US Strategic Dialogue was instituted in July 2009 during the first visit of Secretary Clinton to India in her then new role. Our objective was to make our multi-faceted partnership stronger in areas to which both sides attached importance and which are of vital interest and concern to the daily lives of our two peoples. The Dialogue therefore identified five principal pillars for expanding cooperation: strategic cooperation, energy and climate change, education and development, economy, trade and agriculture, science and technology, health and innovation.
Subsequently, we have held two meetings of the Strategic Dialogue – the first in June 2010 in Washington D.C. and the second in July 2011 in New Delhi. In the period since that July 2009 visit of Secretary Clinton, we have had the very productive and successful visit to the United States of Prime Minister Dr. Manmohan Singh, who became the first State Guest of the Obama Administration in November 2009 and also the memorable visit of President Obama to India in November 2010. It was during that visit that President Obama characterized the India-US partnership as one of the most significant,indispensable and defining partnerships of the 21st century.
Just earlier this month Secretary Clinton visited India again for discussions that reaffirmed what is, as our External Affairs Minister put it , “ our close friendship”. And in a few days from today, External Affairs Minister Krishna will come to Washington for the third meeting of the India-US Strategic Dialogue.
In these last three years since the institution of the Strategic Dialogue, we have attempted to translate the vision of our leaders into reality in various ways. The Strategic Dialogue meetings have provided a unique bilateral forum for stock-taking and giving political direction to the ever expanding landscape of bilateral partnership and created a multi-hued canvas of mutually beneficial cooperation.
The foundations that we jointly laid in recent years, by removing irritants and constraints that hobbled the growth of our relationship for a long time, have enabled a strategic partnership that is at once dynamic and infused with positive momentum. Today, there is a remarkable degree of depth and diversity in our partnership; there is comfort and candor in our dialogue; and, there is extensive support for this cooperation across a broad spectrum of public opinion in both our countries. Ours is a relationship, as Prime Minister Manmohan Singh has said, "founded on many pillars, it is based on pragmatism and principle; and strengthened by shared values and common interests."
The strength of our relationship is reflected in the presence of a large India Caucus in both chambers of the U.S. Congress. These are, we understand, the largest bilateral caucuses in the U.S. Congress today. We take immense pride in their efforts to promote our relationship. They have not only done a commendable job in focusing public opinion and attention of both our governments on the importance of our relationship, but have eminently showcased the bipartisan support enjoyed by the India-U.S. strategic partnership.
I want to use the opportunity today to briefly review what we have achieved but more importantly to provide an outline, as we prepare for the Strategic Dialogue, on the strides made in our bilateral engagement over the past few years and our vision of the future that beckons.
An unprecedented level of bilateral engagement has been sustained as reflected in the visit of Secretary Clinton earlier this month. We have launched new strategic consultations that cover key regions of the world, and in the case of the Asia-Pacific have expanded it with a new trilateral dialogue with Japan.
At the United Nations while there have been some differences in our approach due to our different perspectives, I believe that our American friends appreciate our sincere effort to be a voice of moderation and constructive engagement. We have strengthened the global dimension of our partnership by commencing cooperation for development in third countries. In Afghanistan, we are working on joint projects in the areas of capacity building, women’s empowerment and agriculture. Similarly we are trying to capitalize on our respective strengths to assist a few African countries in the area of agriculture. This is very reflective of the approach that President Obama spoke of in his address to our Parliament in November 2010 when he said that India is indispensable to the United States' vision of an interconnected world. That was also the occasion when President Obama said that a United Nations that is efficient, effective, credible and legitimate has to include India as a permanent member of the UN Security Council.
Our relationship is based on our shared values and shared interests as two of the world's largest democracies. Given the priority that both our countries attach to transparency in governance, we have launched an Open Government Platform, leveraging the best features of India’s “India.gov.in” and the U.S. “Data.gov” sites. We have also indicated our willingness to share this platform with other interested countries.
Our cooperation in counter-terrorism has deepened with the launch of a new Homeland Security Dialogue. Thanks also to the civil nuclear initiative, issues which once used to be source of contention, are now becoming wellsprings of cooperation such as in the area of nuclear security and export controls. The US has extended its support to India’s membership in multilateral export control regimes. This support was borne out of our shared belief that India can contribute to enhancing international non-proliferation efforts. India and the US are constructively engaged along with rest of the international community to fashion a collective international response based on effective action at the national level to prevent vulnerable nuclear material falling into hands of non-state actors and terrorist groups, and thus make our world more secure.
Our defence partnership, once barely discernible, has seen exponential growth. We have, since 2005, placed orders for procurement of defence equipment from the US, for our armed forces, totaling now more than US$ 9 billion; we conduct regular military exercises and have engaged in useful dialogue between our defense departments. Defence Secretary Panetta will be visiting India next week, at the invitation of our Defence Minister, Mr. A.K. Antony, to further consolidate our growing defence partnership.
At the same time, we have also forged new areas of cooperation in higher education, renewable energy and energy efficiency, health and science and technology, using innovation and the immense drive and creativity of our two peoples to work towards solutions that would benefit us all. For instance , we have held a successful Higher Education Summit last year and will soon be holding our first bilateral Higher Education Dialogue which we hope will help strengthen teaching and research in both US and Indian institutions through university linkages, junior faculty development and also help the growth of the community college sector in India. It is our cooperation in this vital field that can provide the intellectual sustenance to the idea of a strong India-US partnership. We are also partnering with the US across the entire range of issues related to agriculture – from using space technology for better monsoon prediction and crop productivity to improving linkages from farm to market.
In a similar fashion, US firms are forging partnerships with Indian institutions for research, development and deployment of cutting edge technologies in the pharmaceutical and biotechnology sectors that would contribute to the better health of our peoples. Our scientists are already working with US institutions such as the National Institutions of Health and Center for Disease Control capitalizing on each other’s comparative advantages and skills. Under the Science and Technology Endowment Fund that our two governments have established, we are working to finalise awards for projects in coming few weeks. As our partnership grows in cutting edge areas, it is important that we facilitate easier two-way movement of our scientists and experts.
Our trade in goods and services has increased fourfold since 2005 to reach US $ 100 billion. Capital flows are now a two-way phenomenon. US still remains one of the largest investors in India’s growth, and at the same time, Indian companies have also invested and integrated with the US economy. From 2005-2009, Indian businesses are known to have invested about US$25.5 billion in about 43 States of the US in wide ranging fields including IT products and services; manufacturing; distribution and packaging and educational tie-ups. To further boost investments in each other’s economy, we have resumed negotiations on a Bilateral Investment Treaty and have expanded opportunities for economic cooperation through measures like the Infrastructure Debt Fund and tariff reductions on products with potential for bilateral trade.
Yet, I am also aware that in the last few months there has been talk that our bilateral relationship is “oversold”. This is neither subscribed to by the two governments nor is it supported at all by facts on the ground or the reality as I just briefly described. The myth subsists in its own echo chamber focusing on one or two aspects and seemingly overlooking the whole picture of the relationship.
There is for instance, fretting that the civil nuclear initiative – that has been the catalyst in transforming our relationship – has yet to yield commercial benefits for US firms; others seem to conflate the loss of one defence contract to create the factually incorrect inference that there is no progress at all in our defence partnership. These views do not do justice to our relationship.
As our Prime Minister Dr. Manmohan Singh has said the civil nuclear initiative is a symbol, the instrument and the platform of a transformed India-U.S. relationship. We are committed to providing a level playing field to all our international partners including US firms. I am aware that there are some concerns about the civil nuclear liability law that our Parliament has passed. But we have had useful discussions and have sought to address these questions and concerns with seriousness and transparency. In fact, the Indian nuclear power plant operator NPCIL, and the U.S. companies are actively engaged in discussions to finalize an agreement to commence commercial operations.
And while the US firms might have lost out of the MMRCA bid, it must be appreciated that there are many other contracts which they have successfully won. Today the US has emerged as the third largest supplier of defence equipment for India when only a few years ago there was almost no defence trade. And this is set to expand further. We are making continuous progress in understanding each other’s procurement and approval processes; and we look forward to extending this engagement from simple trade to technology transfer and joint research, development and production.
In India, as a result of this debate here in the US, the question asked is whether our American friends may be emphasizing the aspect of maximising immediate returns rather than taking a long term view of the relationship itself?
So how do we in India see the future of our relationship? First of all, the people of India, across all shades of political opinion, support the prospect of an ever growing partnership with the United States. In our quest for development, we see the United States as a valuable partner and we are confident that the long term cooperative framework for this relationship will continue to become stronger and more broad-based. Let me highlight some priority areas:
Firstly, the strengthening of the economic partnership. As Secretary Clinton said during her visit to India, there is much more potential to unleash and we should be working towards having one of the world’s largest trading relationships. As the Indian economy continues to grow and modernize, and as the U.S economy recovers its momentum, I am confident that our trade and investment relations will surge to higher levels. As the economic relationship matures, stakeholders on both sides would need to consider being open to exploring new measures to advance our trade and investment relationship to the next level including through new mechanisms. For instance, would there be utility in pursuing the prospect of a Free Trade Agreement, as some have spoken of? Building preferential partnerships in the economic field will require thoughtful consideration.
We in India, remain committed to pursuing economic reforms in their broadest sense. Now it is true that the pace of the reforms in India, may sometimes be uneven as we try to ensure that the fruits of economic growth contribute towards greater equity, empowerment and opportunities for a large section of the population. But the trend is irreversible. Let me add categorically that the India growth story is far from over.
A key aspect of our economic engagement is partnerships in high technology areas. As strategic partners, we believe that increasing trade in advanced technology products and technologies would open up an entirely new area of enhanced cooperation. We are no longer politically constrained in this field. And, there is complementarity in the existence of ample demand and appetite in India and a strong US supply base.
I must also mention the increasing concern among Indian businesses, especially the IT industry – which has been a leading champion of a better bilateral relationship – about the difficulties they face due to progressively stringent visa regulations. According to the Indian software industry association, NASSCOM, Indian industry employs over 100,000 people in the US up from 20,000 six years ago. It supports 200,000 other jobs including indirect ones, apart from enhancing the competitiveness of some US industries. Most Indian companies are setting up development centers here. The Indian IT industry contributed $ 15 billion in taxes in the US over the last five years. Ironically, the same industry is subject to new restrictions imposed on H1-B and L1 visas. We hope this is not a trend that will be sustained. The logic and rationale of our partnership merits otherwise.
We also hope as our investments flows further increase, it would also become easier for Indian financial institutions to expand their operations in the US. And as we look at ways and means to expand our trade and investment, we are also working together to find solutions to the challenges of clean energy, food security, health, education through initiatives like the India-US S&T Forum, S&T Endowment Fund, the Joint Clean Energy Research Center and the Singh Obama Knowledge Initiative and the Nehru-Fulbright Program.
As we upgrade our infrastructure, provide for clean and sustainable sources of energy to power our economic growth and modernize our agriculture to improve the livelihood of our rural population there will be tremendous opportunities for US businesses. In the last two years we have laid the foundation for pursuing fruitful collaboration in these areas, collaboration which will directly affect and alter the lives of millions of our people. And we remain confident that this will only increase in the future.
For instance, take energy security and the availability of abundant supplies of clean sources of energy which are important for the future well being of both our nations. We are working to build mutually beneficial ties with the US to develop a broad array of clean energy solutions. We have established a Joint Clean Energy Research and Development Centre (JCERDC) to accelerate the transition to high performing, low emissions, and energy secure economies and last month we announced the first awards under this initiative for three consortia – led by Indian and US institutions for taking up collaborative research in the fields of advanced biofuels, energy efficiency in buildings and solar energy. These will bring together experts from national laboratories, universities, and industry in both India and the US to leverage their expertise and resources to unlock the huge potential of clean energy technologies that can reduce energy use and dependence on fossil fuels, and accelerate the deployment of renewable energy sources. Separately as part of our wide-ranging official energy dialogue, we also plan to launch a dialogue to share experiences and perspectives on low carbon growth.
Infrastructure as a sector is a clear opportunity for US businesses. Depending upon the area within this sector, there can be several models for partnership. One of them could be targeted inter-governmental partnership in mega infrastructure projects. To give an excellent example, India and Japan have partnered for the mega (US$ 90 billion) Delhi Mumbai Industrial Corridor. Cooperation in such projects not only strengthens economic engagement, but also bestows concrete commercial gains on both sides.
Our cooperation on combating terrorism has never been stronger than today. We have established a broad framework to pursue counter-terrorism cooperation and must continue to strengthen it in all its dimensions. We are also working closely in the area of cyber security. We need to intensify these efforts.
In terms of broader geo-political trends, we believe that our partnership is important for building a stable, prosperous and secure Asia-Pacific region. There are common challenges that our two countries face – continued fragilities in the global economic situation, geopolitical changes especially in this region, as also the continuing threat of terrorism particularly in South Asia. Whether it is terrorism or the challenge of ensuring security and stability amidst fast paced changes in the Asia-Pacific, our interests increasingly converge and we are finding ever increasing opportunities to work together.
Ensuring the security of sea lines of communication is vital for the continued economic wellbeing of the region. India sits astride crucial sea lanes of communication across the Indian Ocean, through which almost 60,000 ships carry merchandise and energy from the Gulf to East Asia every year. The security of these lanes is increasingly challenged by the rising incidence of piracy as well as other threats such as trafficking in arms, drugs and human beings and linkages with transnational criminal gangs. India values its partnership with the United States as we work together to help safeguard these vital sea lanes. The growth of India's naval capabilities enables us also to craft mechanisms of cooperation with friendly navies, such as the US, for maritime security, and also for emergency and disaster management as we saw during the Indian Ocean tsunami of 2004.
Today, apart from these threats there are also concerns being expressed about freedom of navigation across these maritime commons. India wishes to see the Indian Ocean region develop into a zone of cooperation rather than of competition and domination and we support dialogue between stakeholders. As both our countries have a shared interest in maritime security in the region, cooperation in this area between India and the United States has deepened in the past several years. Our naval forces conduct regular joint exercises and exchanges. The anti-piracy operations off the coast of Africa, where our navies are working together with forces of other countries have brought in a new dimension that requires continued focus. Maritime security cooperation will only increase and strengthen in the future.
Both our countries understand the imperative of ensuring success in Afghanistan, and defeating the evil designs of forces of instability. In the last year, we have had close consultations on the situation in that country and our shared vision for a stable, democratic and prosperous Afghanistan. These consultations must be strengthened. We understand that after ten long years of war, there is a manifest and genuine desire to seek an end to conflict. But equally, we must ensure that the enormous sacrifices and efforts of the past decade have not been in vain. India has invested significant resources for Afghanistan’s development in areas identified by Afghanistan and our Strategic Partnership Agreement with Afghanistan is a reflection of this commitment.
I would like to say a few words about Iran. India believes that while Iran has rights to peaceful uses of nuclear energy, it must simultaneously and rigorously fulfill the treaty obligations which it has acceded to. We have consistently maintained that Iran must cooperate with the IAEA to address and resolve all outstanding issues that continue to raise doubts in the minds of the international community. India has scrupulously adhered to the multilateral sanctions against Iran as mandated by the United Nations. We are also cognizant of U.S. concerns, and have remained closely engaged on the Iranian issue. Crude imports from Iran have a steadily declining share in India’s total oil imports – dropping from a level of over 16 percent in 2008-09 to almost 10 percent in 2011-12, and these are expected to decline further in 2012-13.
I have attempted to lay out the rich and broad canvas of priorities that we hope to pursue further. Our partnership is special in that it goes way beyond what the two Governments are doing or can do. People-to-people linkages provide the sinews of our growing partnership. The energy, creativity and enterprising spirit of our people, private sector, civil society and the Indian American diaspora are constantly exploring new frontiers for our partnership and increasing the bridge span of our cooperation. I also hope that we can add to this mix by seeing a greater number of young Americans visiting India and learning more about our country.
There are some who ask if India can balance its commitment to strategic autonomy with the imperatives of the strategic partnership with the US. I do not believe these two are mutually exclusive objectives. Given our different circumstances, history, location and levels of development, we will occasionally have differing perspectives and policies. But our shared values and the wide range of convergent interests (some even call it strategic convergence), political momentum, public goodwill, a comprehensive architecture of engagement, growing levels of comfort and candor in our mutual dealings, give me confidence that as we look ahead, our partnership will only deepen and that we will continue to consolidate and reaffirm our strategic partnership.
I would like to conclude with very apt words of Senate India Caucus Chair Senator Warner prior to his visit to India earlier this year, and I quote “The United States and India share a common democracy, a common language and a broad understanding of business. I believe we have reached a point where it is time for the U.S.-India relationship to advance from a longtime friendship to a full partnership...."
With these words, I will be happy to take a few questions.