Thank you very much for that kind and warm introduction. And thank you to the members of the Indo-American Chamber of Commerce of Greater Houston for inviting me here this evening to address your 20th Anniversary Gala. It is an honor to share the platform with Houston’s Mayor (and fellow Harvard Law School alumnus) Sylvester Turner, and with India’s Consul General, Dr. Anupam Ray. I also would like to congratulate this evening’s honorees.
It is great to be back in the State of Texas and the City of Houston – two places that are increasingly known for the strength and contributions of their Indian-American communities. During my tenure as U.S. Ambassador to India, we have received visits from both Governor Abbott, in March of 2018, and Mayor Turner, in November of 2018. I am pleased to reciprocate those visits by being here today to recognize the importance of this State and of this City to the U.S.-India relationship.
Texas and India
The business links and the people-to-people ties between Texas and India are broad and deep. Last year, Texas imported $3.6 billion in goods from India and exported $5.1 billion in goods to India. This marks a continued increase for both figures over the last three years. And the exports from Texas account for over 15 percent of all U.S. exports to India.
One important new export is oil and gas, including LNG from Houston’s Cheniere Energy. The United States fully appreciates India’s growing energy needs and the critical role of energy in supporting India’s economic development. We look forward to helping meet those needs with U.S. energy products, including those from Texas.
Indian companies are also expanding business operations in the United States, and the State of Texas has been a prime beneficiary. For example, JSW Steel is investing $500 million in nearby Baytown to refurbish and expand a steel plant. Both Wipro and Infosys have opened technology centers in Texas. And Mahindra USA has its headquarters right here in Houston. These Indian investments create jobs in this country, provide quality products to our consumers, and contribute to our economy.
So it is truly a privilege to address this Chamber and recognize the hard work that you and your companies do to advance the relationship between the United States and India. I would like to speak tonight about that relationship, in the context of the strategic challenges that I believe India will face over the next decade.
The U.S.-India Relationship
The most important message I want to deliver at the outset is that the United States is a friend of India. I arrived in India as the U.S. Ambassador in November of 2017. But I have actually been working on the U.S.-India relationship for close to 20 years – just like this Chamber. During that time, I have seen the relationship grow and evolve – from the perspective of a diplomat, a technology executive, and an investor. From each of these perspectives, I have witnessed and appreciated the enormous opportunities in the relationship. From time to time, there have also been challenges, frustrations, and ups and downs. But if you step back and look at where we were 20 years ago and where we are today, the amount of progress we have made in the last two decades is truly remarkable.
Indeed, many of us here have had the good fortune of participating in and contributing to the most significant period of growth in the history of the U.S.-India relationship. In my opinion, this relationship today is as broad, complex, and rich in substance as any bilateral relationship in the world. It encompasses the entire spectrum of issues in international affairs. We work together on defense, nuclear non-proliferation, counter-terrorism, trade, investment, energy, the environment, health, education, science and technology, agriculture, space, the oceans, and so much more. And, of course, the people-to-people relationship, which is reflected so powerfully in this room today, serves as the bedrock of U.S.-India ties. It forms both a strong foundation and a dynamic springboard for what our nations can do together.
Being in India during its recent national election – which was the largest exercise of democracy in history – provided a powerful reminder of our common values. These values, as well as our shared interests, reinforce the strength of our long-term, strategic partnership. It is a partnership that embodies what former Prime Minister Vajpayee correctly called “natural allies.”
I say all of these points at the outset to give you my sense of the importance of the U.S.-India relationship. I thought it would be useful now to look ahead with you to see where this relationship can go. To do so, let me focus on four strategic challenges that, in my view, India will face over the next decade. These are: one, managing the rise of China; two, dealing with terrorism; three, promoting economic growth; and four, modernizing the military.
The Rise of China
One of the most important developments in international affairs is the rise of China as a global power. A rising China, under any scenario, presents challenges to India and the Indo-Pacific region. As the leaders of the United States, India, and like-minded countries such as Japan have thought about the future of this region, they have each articulated a vision and set of principles for a free and open Indo-Pacific.
This vision is one of inclusion for all countries that seek to promote a stable and prosperous region. The expressed set of principles for the Indo-Pacific includes the following:
- We want an open and rules-based order, which respects the sovereignty and territorial integrity of all countries.
- We want to guarantee freedom of navigation, freedom of overflight, and freedom of commerce.
- We want free and fair trade, and the free flow of goods, services, capital, and data.
- We want territorial and maritime disputes to be resolved peacefully, in accordance with international law.
- And we want a region with private sector-led growth, transparent commercial and procurement practices, and responsible debt-financing.
Based on these principles, the United States, India, and other like-minded countries will need to work together over the next decade to build out a supporting architecture for the Indo-Pacific region.
We are now seeking to identify opportunities and concrete projects that can enhance the connectivity and infrastructure of the Indo-Pacific, so as to accelerate economic growth. The U.S. Government has recently enacted programs and legislation in support of this objective. These include the Asia EDGE initiative, which stands for Enhancing Development and Growth through Energy. This initiative is designed to grow sustainable and secure energy markets across the region. There is also the BUILD Act – which stands for Better Utilization of Investments Leading to Development – and involves the creation of a new federal agency to address international development priorities. This new agency – the U.S. International Development Finance Corporation – will combine the capabilities of the Overseas Private Investment Corporation (OPIC) and USAID’s Development Credit Authority, while introducing new and innovative financial products to better provide private capital to the developing world.
The Scourge of Terrorism
The second challenge that I mentioned is terrorism. The United States and India have suffered terrible terrorist attacks in recent years. Tragically, just a few weeks ago, there were a series of horrific terrorist attacks in India’s neighbor, Sri Lanka.
These devastating attacks highlight the importance of U.S.-India cooperation in the fight against terrorism. Examples include our work together in the aftermath of the terrorist attack against India on February 14 at Pulwama. This Spring, the United States and India convened a meeting in Washington D.C. of our Counterterrorism Joint Working Group, which sketched out next steps in our bilateral cooperation. In addition, we led efforts at the United Nations last month to successfully designate Masood Azhar, the leader of the group Jaish-e-Mohammed, as a global terrorist. The United States and India also have a Designations Dialogue, which is focused on identifying and sanctioning other terrorists. We work together in the multilateral Financial Action Task Force to put pressure on countries to prevent the financing of terrorists. And for almost five years, U.S. and Indian Special Operations Forces have been conducting joint counter-terrorism training.
Looking ahead, we are working with India’s next generation of counter-terrorism experts. During 2018, the U.S. Embassy provided 22 counter-terrorism training courses for 340 Indian participants. Our law enforcement professionals also regularly exchange best practices with their Indian colleagues. We continue to increase information sharing on suspected terrorists, terrorist financing, and other security matters. In short, eliminating the scourge of terrorism is a key challenge for a free and open Indo-Pacific region, and one on which we will continue to work closely with India.
Let me now turn to the challenge of economic growth. The United States very much believes that a strong and prosperous India is not only in India’s interest, but in the interest of the United States, the region, and the world. One of the thoughts that I hope you will take away from my remarks this evening is that the United States – and I know this includes the companies represented in this room – wants to be a major partner in India’s economic growth and development. Indeed, we can be India’s most important partner in this regard.
The United States is the market for roughly 20 percent of India’s exports in goods and services. Think about that. In a world of almost 200 countries, the United States consumes almost 20 percent of India’s exports. When I was Under Secretary of Commerce in 2001, there was approximately $20 billion dollars in bilateral trade, and the U.S. Ambassador at the time said that trade was “as flat as a chapati.” Now, bilateral trade is over $140 billion – a seven-fold increase. In fact, the increase in total trade in goods and services in 2018 was almost $16 billion, and we expect to see that continue to grow in future years.
Recently, the United States granted India Strategic Trade Authorization, Tier One status – known as STA-1. This is a license exception provided only to our closest allies. It enables India to import many of our most sensitive items of so-called dual-use technology – which is technology that has both civilian and military applications. No country in the world has more advanced technology than the United States, and the STA-1 license exception opens the door for India to access that technology.
In addition, U.S. companies are consistently the largest source of foreign direct investment in India. Our companies play a critical role in supporting key industries, hiring and training employees, developing local managers, contributing to research and development, providing technological know-how, and beginning to integrate India into global supply chains. And, as mentioned earlier, Indian companies are increasingly investing in the United States – including in Texas – and hiring and training our employees and local managers.
This is a lot of good news for the economic and commercial relationship. But I would be less than candid if I did not note that there are also frictions and frustrations on the trade and investment front. These include limited market access for certain U.S. goods and services, high tariffs, restrictions on the free flow of data, and an unpredictable regulatory environment for investors. We are working with the Government of India to try to resolve these trade and investment issues, in order to fulfill the potential of our economic relationship and promote India’s long-term growth. Resolving these concerns and eschewing protectionist policies will send a powerful signal to U.S. stakeholders as well as investors around the world that India is a world-class destination for commercial activity and an alternative business hub to China, where many companies are finding it increasingly difficult to operate.
Finally, with regard to India’s defense sector, here, too, the United States is a key partner, and we would like to do more. The U.S. Government knows that modernization is a priority for the Indian military. India is projected to spend, by some estimates, as much as $150 billion on military modernization over the next decade. India will find no better technology, and no better defense partner, should it decide to invest some of those resources in U.S. equipment.
Over the last 20 years, we have seen India procure top-of-the-line U.S. military equipment, such as the Apache and Chinook helicopters, the C-17 and C-130 military transport planes, howitzers, and P-8 surveillance planes. This has contributed to India’s military capabilities, while demonstrating the reliability of the United States as a defense partner. Moreover, because of the transparency associated with U.S. defense exports, there has never been any scandal associated with any of these procurements. U.S. companies are also increasingly working with Indian partners to manufacture defense equipment in India, which builds out India’s indigenous capabilities and projects a message of strength.
Last September, at the inaugural 2+2 Ministerial Dialogue between our top diplomats and defense officials, the United States and India laid out a positive, forward-looking vision for the U.S.-India strategic partnership. We agreed to increase our military exercises and exchanges, and bolster cooperation on maritime security. We also signed the Communications Compatibility and Security Agreement – known as COMCASA – which further facilitates access for the Indian armed services to advanced U.S. technology, and provides for improved information sharing and interoperability with U.S. forces as we train together across the Indo-Pacific. We look forward to working with the new Indian government as we plan for the next 2+2 Ministerial, hopefully this Fall.
As we work with India on security issues in the Indo-Pacific region, we will continue to emphasize our belief that the United States offers the best and most advanced defense equipment in the world. But the United States does not just have great hardware. We also have the software and integrated networks needed for national defense. After all, it is no longer the case in today’s world that armies fight armies or navies fight navies. Who has the better fighter aircraft or naval warship will not alone