Mr. Kant, Mr. Singha, distinguished members of the Amcham Board, ladies and gentlemen, good afternoon. It is so nice to see a lot of welcoming faces, colleagues, and friends of both the United States and India. I want to thank you for your kind invitation and the opportunity to address Amcham, an organization of enormous value that has played a significant role in strengthening the economic, social, and political relationship between our two great nations.
Two years ago, during my first major speech in India as Ambassador, I stood before many of you and outlined the critical importance of the U.S.-India bilateral relationship. It seems serendipitous to have the opportunity to address this same group today and share my message as I close out my tenure as Ambassador to retire to my new home in Delaware. In the intervening two years, we have accomplished a great deal and we have also weathered a few storms. As I prepare to leave, I remain convinced that the relationship between India and the United States will play a central role in global affairs in the decades to come. I am not alone in this sentiment. Just last week, the Indian Ambassador to the United States, Dr. Jaishankar, told an audience at the Harvard Kennedy School, “India and the U.S. are today positioned to embark on a more closely collaborative path. The world the two nations seek does look similar in the big picture: with greater prosperity, more freedom, market economics, rule based regimes, and pluralistic societies.” With these words in mind, I point to India’s ongoing elections, which are the largest exercise in democracy of human history, and that will set the stage for the next phase in our bilateral relationship. I completely agree with Ambassador Jaishankar, it is now more important than ever to reaffirm the commitment of our two great nations to collaborate to enhance our mutual security and prosperity.
It has become fashionable for pundits to claim the India-U.S. relationship has fallen into the doldrums. I must disagree. A relationship that is strengthening and deepening may not draw splashy headlines, but it is not headlines that should define us. Instead, I look at concrete examples of what we have accomplished. We cooperate on strategic issues as never before, having initiated a series of regional dialogues including U.S.-India-Afghanistan bilateral and trilateral meetings and a separate trilateral with Japan. Our governments formalized bilateral cooperative efforts in off-grid energy access, nuclear safety, ultra-efficient space cooling, and shale gas development. When Prime Minister Singh and President Obama met last September, the Nuclear Power Corporation of India, Limited, and Westinghouse signed an initial contract under the U.S.-India Civil Nuclear Agreement. We exchange information regularly on issues of security concern that makes us safer every day in India, in the United States, and in the world. Our militaries train and conduct exercises together in a way that would have been unimaginable just a few years ago. The Defense Trade and Technology Initiative, or DTTI, opens a vista where together we could manufacture more and better defense articles – together. And we cooperate to help others, for example, on agricultural technologies to benefit farmers in Africa.
This is just a sampling of areas where we collaborate. How about high-level visits? Just last summer we hosted a visit by Vice President Joe Biden. In my time here, we have had four – yes four! – visits by Secretaries of Energy Chu and Moniz. In addition to Energy, we hosted Secretary Clinton’s last and Secretary Kerry’s first Strategic Dialogue in India as well as cabinet secretaries from Defense, Commerce, Treasury, and Health; we also welcomed numerous heads of agencies, such as NASA, OPIC, EXIM, TDA, USAID, the Federal Reserve, and others. Since my arrival as Ambassador to India, the U.S. Mission has supported dozens of delegations led by U.S. governors and mayors, U.S. universities, and other trade-focused groups in their visits throughout India. We have opened American Business Corners (ABCs) with local trade partners in twelve cities throughout India, where we had little or no trade three years ago. This is a track record which testifies to the strength and growth of the relationship.
I mention Vice President Biden again, because it was during his address at the Mumbai Stock Exchange last summer that he challenged the leadership in both of our countries to expand bilateral trade in goods and services from its current level of nearly $100 billion to an ambitious goal of $500 billion. This will require both governments to make some tough, but vital, decisions. This afternoon, I would like to take a few minutes to expand upon Vice President Biden’s challenge by: 1) reflecting on what $500 billion in bilateral trade would really mean for our two economies; 2) thinking about the economic sectors that will be critical to reach this goal; and 3) sharing some thoughts on what it will take for us to get there.
What Does $500 Billion in Bilateral Trade Mean?
Five hundred billion dollars in bilateral trade… What does that actually mean? U.S.-India bilateral trade in goods and services increased from almost $29 billion in 2004 to more than $95 billion in 2013. That’s an average growth rate of nearly 15% per year. Last year, we saw only a modest 2.5% growth in trade during 2013—a low figure that starkly highlights the risk of future inaction. Over the same 10-year period, U.S. exports to India grew about 15% annually to reach nearly $35 billion and created an estimated 120,000 new U.S. jobs! The top U.S. exports to India were: manufactured goods, transportation equipment, and chemicals, along with education services, which together totaled nearly $15 billion in exports during 2013.
Overall, the United States is India’s largest trading partner; number one in trade for services, and number two for merchandise. India’s top exports to the United States were: manufactured goods, chemicals, and apparel and textiles, along with information technology (IT) services, which totaled more than $38 billion in trade in 2013. India exports significantly more to the United States than it imports – to the tune of nearly $26 billion more in 2013 – with much of this trade in high value products and services. So, just as the U.S. exports to India create U.S. jobs, U.S. imports from India generate economic activity and jobs here.
But our economic relationship goes well beyond just trade. According to a recent Confederation of Indian Industry (CII) study, Indian companies have invested $17 billion in America, employ some 81,000 people, and India has emerged as one of the fastest growing sources of foreign direct investment (FDI) into the United States. Likewise, U.S. companies, many that you represent, are significant investors in India. Our unofficial estimate of 50 leading American companies suggests they employ a half million Indian citizens. In addition to helping create jobs and employment, U.S. companies are also clear leaders in corporate social responsibility, gender equality, good governance, skills development, and technical capacity. I saw that technical capacity vividly myself a few months ago, when I visited Corning’s amazing state-of-the-art fiber optic manufacturing facility in Pune.
Key Sectors to Reach $500 Billion
When we talk about reaching $500 billion in bilateral trade, there is no doubt that this growth must include a broad range of industries and economic players. As a head start, many of these key sectors will be highlighted this coming November, as we partner with India for the 2014 Indo-US Technology Summit and Expo, an event that will bring together industry, policy makers, researchers, higher education, and many others to advance U.S.-India science and technology cooperation, engage in policy discussions, and explore increased collaboration. Much of this effort will touch on the particular sectors I would like to focus on as providing remarkable opportunities to rapidly expand U.S.-India trade: (1) civil aviation; (2) defense; (3) infrastructure; (4) energy; (5) healthcare; (6) IT services; and, (7) agriculture.
Current government-to-government activity reflects U.S. commitments to support aviation safety, security, training, and best practices. U.S. companies actively participate in the United States Trade and Development Agency (USTDA) Aviation Cooperation Program. Recent successes by U.S. companies include the $4.4 billion sale of Boeing aircraft to SpiceJet and Raytheon’s role in aviation navigation and traffic management systems. India already manufactures significant volumes of aircraft components, and the joint venture between Tata Advanced Systems and United Technologies to manufacture aerospace components showcases the possibilities of Indo-U.S. business ties. And with India expected to become the third largest aviation market in the world by 2020, there is ample room to grow.
The defense sector continues to be an area of increased cooperation and great potential. We want to help India in its efforts to modernize its military by co-producing and co-manufacturing the next generation of defense technology. When we make the same equipment, we operate the same equipment, and we also build connections that reinforce our overall defense relationship. Here is where “prosperity” blends into “security” as our defense collaboration contributes to our common interest to promote regional and global stability.
Infrastructure development is critical to India’s future, requiring more than $1 trillion of investments in roads, rail, ports (both sea and air), and information and communications technology infrastructure. The World Bank plans to loan $1 billion to India’s rail sector. The U.S. has valuable experience and technology in rail freight, with the largest railway network in the world. Let’s work together to enhance India’s railways, which represent a country-wide transportation network unparalleled in the number of citizens it reaches per kilometer of track. India’s cities are also building and expanding metros, and there are similar synergies in sea and airports. The state of India’s current infrastructure poses a serious bottleneck to economic growth, and thus, to U.S. trade and investment potential. A focus on addressing India’s infrastructure needs will break open that bottleneck to improve the lives of Indian citizens and create jobs for both our economies.
Similarly, India’s economy cannot grow if it doesn’t have sufficient power to develop, if 400 million people, or more, live without electricity. The U.S. is a key partner for energy and power development in India. U.S. companies are active players in all sectors of renewable and thermal power generation. Westinghouse and General Electric are prepared to develop 12,000 megawatts of nuclear power in Gujarat and Andhra Pradesh, potentially doubling India’s ability to generate clean, safe, reliable nuclear power and generating billions of dollars of economic activity in both countries. In 2013, our U.S. Department of Energy approved a second project to export liquefied natural gas (LNG) to India, likely to begin in 2017. The 5.6 million tons of LNG contracted have a value of over $1.5 billion per year and could increase India’s gas supply by as much as 40 percent. There is an underlying challenge here, however, because until now rapid energy growth has meant rapid growth in climate warming emissions as well. But the challenge contains an opportunity. Just as India led the way in revolutionizing business processing services, there is no reason that India cannot become a leader in clean energy and export climate saving technologies to the United States and to the world.
India’s domestic healthcare market is currently valued at $77 billion, with highly competitive segments in the pharmaceuticals, medical devices, and biotechnology arenas. The U.S. health care market is an astounding $1.7 trillion – that’s trillion with a “T”. As India increases its per capita investment in public health, there will be new opportunities for U.S. and Indian firms. Already, the U.S. is the principal export market for Indian producers and American companies are major investors in the sector. With Indian Information Technology (IT) companies building healthcare products and platforms, there are tremendous opportunities for trade growth in both directions.
Other sectors to note include agriculture, education, and tourism. In agriculture, the U.S. and India pioneered the Green Revolution in the past, demonstrating what we can achieve working collaboratively together. In fact, I had the privilege of standing in the U.S. Capitol last month when the State of Iowa dedicated a statue of native-son Norman Borlaug in Statuary Hall, matching one inaugurated at the National Agricultural Science Centre Complex in New Delhi. Dr. Borlaug was the father of the Green Revolution, along with Dr. M.S. Swaminathan, and contributed enormously to U.S.-India ties. Today, the U.S.-India agriculture relationship has only scratched the surface of our potential bilateral cooperation in the areas of science and innovation, as well as trade.
In 2013, education generated $3 billion in economic activity between our two countries – doubling over the last ten years. India has a growing population that will only increase enrollment demand here and in the United States, and there is untapped potential for U.S. students to come to India.
Tourism is also growing fast. In 2013, 859,000 Indian tourists traveled to the United States, and that number is expected to cross one million by 2015. And Americans represent the largest group of foreign tourists to India, surpassing one million in 2013. With a rich culture, history, and beautiful locations to visit, India is a world class destination with tremendous potential to draw vastly greater numbers of tourists from America and around the world. By harnessing the opportunities in these and other sectors, reaching the $500 billion trade goal can become a reality. But how do we get there?
How Do We Get There?
There is no doubt that the accomplishment of reaching nearly $100 billion in trade has had significant impacts in each of our economies and the lives of our citizens. Imagine the benefits to both of our countries if we collaborate further and reach a trade partnership that tops $500 billion? That’s more and better choices for consumers in our two societies and more and better jobs for our people, a top concern in both the United States and India. To achieve this goal, however, we need to do much, much more to unlock the full economic potential of our bilateral relationship. Both countries need to implement policies that stimulate investment and trade.
Some people point to the press headlines in both our countries describing challenges and frictions in our current trade relationship and are incredulous to hear us talk about the U.S. and India reaching $500 billion in bilateral goods and services trade. Certainly achieving this goal will be no easy feat and could take many years to accomplish. However, because of the clear benefits it would bring, it is an ambitious and worthwhile goal for both of our nations to strive toward.
While the goal will be attained through the actions of private companies and individuals, there is much that governments can do to facilitate its accomplishment. For example, it is important to first nurture an environment that attracts growth. All investors evaluate transparency, predictability, infrastructure, and the labor force when making business decisions. The United States and American businesses welcomed the transformational economic reforms begun in India in the 1990s, with additional enhancements in 2002 and 2003. These changes revitalized India’s economy and U.S.-Indian trade relations. We also acknowledge and appreciate the recent and difficult steps the Government of India has taken to encourage a positive environment for economic growth in India.
A logical next step in making significant advances in bilateral trade is for the United States and India to sign a Bilateral Investment Treaty (BIT). We are pleased that negotiators met face-to-face to continue technical discussions in February. We need to push forward these negotiations because a successful BIT will bring benefits to both countries, and it could also pave the way for more far-reaching agreements that could potentially yield much larger trade results for both our economies.
Robust engagement is a cornerstone of a healthy bilateral relationship. For the United States, this means that we must be willing to discuss issues that are important to India. And while we are strongly opposed to forced local content requirements, we are sympathetic to the desire to develop a stronger manufacturing sector, and are ready to discuss how India might develop that capacity in a way that does not constrain trade. By the same token, we ask that India engage with the United States, at senior and working levels, to have those difficult discussions on issues such as intellectual property rights and taxation.
The U.S. market is the largest and one of the most open and competitive markets in the world, accounting for 19% of the global economy – nearly $17 trillion in economic activity. Indian products are welcome, as are Brazilian, Chinese, and South African products. We welcome the competition and believe it encourages our companies to excel in their competitive niches. We believe India as well has the strength and resilience to meet competitive challenges, and we encourage India to lower tariff and non-tariff barriers as a first step to its own greater prosperity. In July, India will begin the process to implement its trade facilitation commitments from the WTO Bali package. The WTO Trade Facilitation Agreement embraces multilateralism, promotes the idea of common ground on which to trade, and encourages a growing partnership among India, the United States, and the global community which will benefit all.
Yes, achieving $500 billion in bilateral goods and services trade will be challenging, but that should not hold us back from setting an ambitious goal. If the borders of both our nations are open to the free flow of capital, goods, services, technology, ideas, and innovation, then trade will flourish. Today, I challenge all of us, our governments, and leaders across politics, business, academia, and society to work together to realize the full potential of the U.S.-India trading relationship. One possibility might be the convening of a Track 1.5 event during the first 100 days of the new Indian government to begin a conversation on how we can best accomplish this task.
As I prepare to retire from the Foreign Service, I am truly awed at the progress India has made over the past 20 years as well as by the depth and strength of the overall U.S.-India relationship. I am excited to think of the possibilities that are yet to come. And I look forward to the day, not too far in the future, when a successor of mine will be able to announce that the U.S.-India bilateral trade in goods and services topped $500 billion. Let us start to work together towards this objective today. It will benefit us in the present and create a great legacy for future generations of Indians and Americans.