(As Prepared for Delivery)
First and foremost, I would like to thank the American Chamber of Commerce in India and the U.S.-India Business Council for the invitation and opportunity to speak with you today.
As the head of the International Trade Administration in the Department of Commerce, an agency whose mandate is to create opportunities for U.S. businesses by promoting international trade, attracting foreign direct investment, and fostering a level playing field for U.S. businesses, I look forward to working with both the Chamber and the Business Council to reach our full promise as commercial partners.
Roughly five years ago, President Obama declared that “The relationship between the United States and India will be a defining partnership in the 21st century.”
And while the U.S.-India partnership will help define the 21st century, it is important to recognize how our partnership is a long-standing one that extends as far back as the birth of our nation.
More to the point, when you analyze every step we have taken to define our partnership, it is clear that business and commerce have been at the center of those very steps.
In the 18th century, our diplomatic relations began when President George Washington named Benjamin Joy, a merchant from Massachusetts, to be U.S. Consul to Kolkata.
At the beginning of the 20th century, the American steel-mill builder Julian Kennedy entered into a partnership with Jamsetji Tata, founder of the Tata Group, to build what would be the first steel mill in Indian history.
Around the same time, India’s first hydropower plant would be installed by GE, and Citibank began operations, also in Kolkata.
Throughout the 20th century, our commercial partnership has profoundly deepened, particularly as Indian-Americans played a critical role in the U.S. business landscape, as entrepreneurs, founders of successful technology firms, venture capitalists, and CEOS of Fortune 500 companies.
That partnership today is also advanced by Indian-Americans who serve in our public sector.
They include our two Indian-American state governors, the Indian-Americans serving in Congress; as well as the Indian-Americans that serve at high-levels in the Obama administration: Ambassador Verma, the first Indian-American to hold the position of U.S. Ambassador to India; Assistant Secretary of Commerce Kumar, who works closely with Ambassador Verma in cultivating our business ties; Ambassador Thummalapally, the first Indian-American ambassador in U.S. history; my senior policy adviser, Arun Venkataraman; and Secretary Kumar’s senior adviser, Atman Trivedi.
The centuries-long effort to create this partnership has led us precisely to where we are today two countries ready to operate as engines of mutual growth and prosperity.
In terms of India, U.S. companies are responsible for nearly 5% of Indian GDP, while employing about 840,000 people in this country. The U.S. is one of India’s largest export markets, with Indian goods exports to the U.S. in 2014 estimated to support more than 235,000 Indian jobs. And Indian services exports in 2012 estimated to support more than 130,000 Indian jobs. And the U.S is proud to be a leading source of FDI for India with 2014 figures just under $30 billion.
From the standpoint of the U.S, our exports of goods and services to India support more than 180,000 American jobs. India is one of our five fastest growing sources of FDI. And companies like SG Mills, Maqdoom Brothers, Mahindra’s Genze, and Strand Life Sciences are more than Indian companies doing business in the United States. They are full-fledged members of the American business community, hiring American workers and contributing to the economic development of towns and cities across our country.
So because of the partnership that we have crafted and the mutual gains we have experienced, the U.S.-India partnership sends several powerful messages: that the economic goals of our two countries’ mirror each other; that we are deeply invested in each other’s growth and success; and that the United States does not only support India’s continued rise; but that in fact we are a key stakeholder in that rise.
Today, the United States and India are each at profound inflection points in our commercial and economic histories, inflection points that require that we take the next step in defining our partnership.
For the United States, our inflection point stems from our unprecedented need to engage the global economy in order to secure sustainable, robust economic growth. That is reflected in the last five years of consecutive record exports, the fact that we are currently the world’s largest recipient of foreign direct investment, and in the way that exports have helped the U.S. economy rebound from the greatest economic crisis since the Great Depression.
India’s inflection point is rooted in the mandate for economic development given to the Modi government by the Indian electorate: a mandate to deliver on the bold economic agenda that the electorate, as well as the Indian and foreign business communities, have been calling for.
But most importantly, never in our respective histories have our economic goals required such broad and deep engagement between our two nations.
All of this is precisely why we are ready to take our next step. And that next step will take place later this year when our two countries will launch the first-ever Strategic and Commercial Dialogue.
The S&CD will be the signature, annual dialogue between our two governments. It will serve as a high-level meeting between our senior government and cabinet officials, as well as an ongoing, sustainable forum for policy discussions.
This ongoing forum will be essential to securing commercial cooperation, notably by working consistently to create deliverable commitments, and ensuring that our governments follow through on those commitments.
This year’s Commercial Track will focus on several areas of common interest: building tomorrow’s cities in India, as well as related infrastructure; participating in strengthening India’s business climate to the benefit of both Indian and American businesses; harmonizing product standards to increase trade and further deepen global supply chains; greater integration of our markets particularly to benefit small and medium-sized enterprises or SMEs; and developing best practices in innovation and entrepreneurship.
And as this commercial track becomes an enduring part of our bilateral relationship, it will be defined by three overarching characteristics.
One. It will not only focus on commercial goals.
Today, trade is not only a tool to achieve our commercial goals. It is a critical tool to achieve our strategic and diplomatic goals.
That is why the S&CD will examine how achieving our commercial goals can advance our strategic, Indo-Pacific interests, including those under President Obama’s Rebalance to Asia, and Prime Minister Modi’s Act East policy.
Two. It will serve as a platform for engagement between our public and private sectors.
Before I came to lead ITA, I served for 29 years in the private sector, building and leading a successful investment bank. So I have a profound understanding of the value of private sector insight in crafting sound business policy.
That is why we are intensely committed to engaging directly with business leaders through our expanded U.S.-India CEO Forum. This forum is scheduled to take place immediately prior to the S&CD.
And it will ensure that business leaders play a central role in crafting ideal policies in such areas as trade and investment, technology exchanges, and workforce development.
So I am looking forward to working with all of the members of the forum to maximize its impact.
Three. The Commercial Track will be a platform for both short-term and long-term deliverables.
It will focus on securing near-term trade and investment outcomes, but it will also focus on areas of long-term collaboration as well.
So clearly the Obama administration, the Department of Commerce, and the International Trade Administration see the S&CD as the crucial next step.But to see this new dialogue in strictly these terms would, in fact, overlook its greater importance.
We see that the S&CD also serves as a roadmap; a roadmap that will display the next steps to define our partnership in the medium and long-term. These steps can also be seen as four ambitious and important goals.
The first goal is perhaps the most ambitious: to increase bilateral trade five-fold, from $100 billion today to $500 billion annually. I should note here that for many countries, a $100 billion trade relationship reflects enormous commercial engagement. In fact, in terms of nominal
GDP, our existing $100 billion relationship would be the equivalent of the 64th wealthiest country in the world.
But for our two countries, one country boasting the greatest GDP per capita of any large economy in the world in the United States, and the other country set to become the fastest growing large economy in the world in India, a $100 billion trade relationship is only the start of what can become a transformative trade partnership.
That is why increasing our bilateral commercial engagement is in fact the centerpiece goal for this roadmap.
For the United States, achieving this goal means accessing a market that is not only defined by its size, but also by its youth. According to Indian government figures, 65% of India’s population is now under the age of 35. So engaging this market today means establishing a foundation for two-way growth and prosperity that could endure for generations.
Expanding bilateral trade with India also means expanding the benefits the U.S. receives from Indian exports; specifically given the growing potential for the country – with its talent pool working in large R&D centers – to become leading contributors to global value chains.
And as India embarks on that important economic agenda, U.S. exports can play a singular role in helping India achieve those agenda’s objectives.
Between 2003 and 2013, Indian agricultural exports increased by nearly 800%. So our best-in-class agricultural machinery and technology can ensure that India maintains this export growth trajectory in the coming years, while providing critical tools to the tens of millions that comprise India’s cultivator community. Similarly India’s booming middle class is supporting a thriving restaurant and food processing industry. So this middle class has become a natural driver for U.S. agricultural food exports that can help keep food price inflation in check.
As India looks to facilitate what will become one of the largest urban migrations in history, our construction exports can be a key to supporting this historic development effort.
And perhaps most importantly, there is manufacturing. Prime Minister Modi has made a strong commitment to making India an elite manufacturing hub on the global stage. He has laid down an ambitious and important marker in this effort with his “Make in India” campaign. And India’s incredible manufacturing potential can be seen in the recent commitment by Chevrolet to invest $1 billion to support the “Make in India” campaign.
There are many reasons why India can and should be that elite manufacturing hub. But in today’s global economy, a manufacturing hub of this scope must be driven by partnership. And because we produce the best manufacturing exports period; whether it is machinery, materials, or technology—manufacturing goods or value-added services—India has no better partner than the United States.
The second goal is strengthening the business climate in India.
Last September, Prime Minister Modi extended a call-to-action for improving India’s business climate at an address at the Council on Foreign Relations in New York. He noted that in Hinduism, if you go on four pilgrimages, then you will achieve Moksha or salvation.
The Prime Minister then said QUOTE “But in our country, a file can travel to thirty-two places, but it will still not reach the right place. It will not reach salvation.” He then stressed the need to improve the ease of doing business.
The good news is that we are beginning to see that very improvement. As Indian states compete for foreign direct investment, including U.S. FDI, a race-to-the-top in terms of enacting business reforms seems to be starting to emerge. We also see this improvement in the Indian Government’s campaign to evaluate state business policies for this purpose.
That is why we will work together to cultivate best practices on: contract law and adjudication to ensure the predictability that all businesses need; sound intellectual property protections to incentivize India’s domestic producers to innovate and U.S. companies to export; customs and regulations to reduce and eliminate non-tariff barriers; and corporate governance that is strong and transparent.
But let me be clear. There is no path to strengthening India’s business climate without the critical insights of business.
That is why we are committed to utilizing our CEO Forum to get guidance from leaders of large companies and SMEs on how we should improve the business climate.
And of course, improvement in this space will not only benefit the U.S.-India partnership. Strengthening the Indian business climate will enhance the country’s commercial engagement with all of its present and future partner markets. And naturally, this will lead to greater economic growth for the Indian population.
The third goal is working together to construct a 21st century infrastructure partnership.
Of course, we would not have the opportunity to create this partnership without the commitment the Modi government has made to improving infrastructure, and the incredible gains the country has already seen in this area.
We applaud the agreement that the Indian government reached with the World Bank that will unlock $248 million to improve water and sanitation services in rural Punjab.
We applaud the $250 million commitment Prime Minister Modi has made to upgrade the country’s power grid and to make dramatic investments in solar energy.
We applaud India for the country’s stunning gains in mobile connectivity; where just 10 years ago, only 8 out of every 100 people had a mobile cellular subscription; today, that number is now 74 out of 100.
And we applaud Prime Minister Modi’s commitment to bring broadband connectivity to 250,000 new villages.
These gains and these commitments are part of a larger foundation on which we will build this 21st century infrastructure partnership. And this partnership will be based on three pillars.
One is our Infrastructure Collaboration Platform.
This is a government-to-government platform rooted in collaboration between the U.S. Department of Commerce and the Indian Ministry of Finance. The ICP will encourage U.S. participation by strategically promoting specific Indian infrastructure projects to U.S. companies with aligned capabilities.
Another is our Smart Cities initiative.
Along with the Chamber, the U.S.-India Business Council, the Confederation of Indian Industry, and the Federation of Indian Chambers of Commerce and Industry, we are working on facilitating U.S. companies to partner with interested Indian companies to pursue Smart City projects.
We are engaging in this work with an eye towards helping to achieve Prime Minister Modi’s vision of creating 100 Smart Cities in India.
In fact, we are actively engaged with the three cities identified by the Modi administration for the U.S. lead in developing Smart City projects: Vizag, Ajmer, and Allahabad.
And earlier this month, we launched a campaign in the United States to recruit companies and relevant associations for an executive-led trade mission to bring U.S. smart city and water/wastewater technologies to India. This trade mission will take place next February.
The third pillar is renewable energy.
Renewable energy is, in fact, our highest priority under the Smart Cities Initiative. And through our renewable energy exports, we will partner with India as it transitions to a low-carbon, climate resilient energy economy. This is sure to be a long-term U.S. commitment.
The final goal of this roadmap relates to what Prime Minister Modi has called competitive federalism.
We will work to strengthen state-to-state commercial engagement by cultivating new opportunities and exchanging best practices.
The United States is singularly experienced to participate in this effort. The U.S. Supreme Court Justice Louis Brandeis in 1932 said that states may serve as laboratories of democracy, attempting economic experiments as they choose.
With different states in the U.S. competing for trade and investment partners, our country has produced an array of growth policies such as tax relief, small business credit, and developing robust state-based export hubs. We have seen these policies emerge from California to New York; from Florida to Texas. Today, we are seeing a similar array of growth policies in Indian states from Chhattisgarh to Andhra Pradesh, from Madhya Pradesh to Gujarat.
When states compete for domestic and global business, this creates the incentives for best policies, policies that can be implemented by other states and at the national level as well.
So we will build on this progress through our new commercial track, and through leveraging the power and goodwill of our people-to-people connections. That includes harnessing the talents of our Indian-American business leaders, perhaps the best representation of our shared values.
So with the S&CD emerging as the next step, and the roadmap that will outline the next steps of our partnership, our two nations are in an unprecedented place.
Our partnership spans more than two centuries. And that partnership has sent several powerful messages to the world.
But today, the U.S.-India partnership will be defined by more than just the messages it sends. It will be defined by the opportunities that it presents: the opportunity to realize the full potential of our commercial partnership; the opportunity for the world’s two largest democracies to deepen our engagement as engines of mutual prosperity; and the opportunity to collectively take our place as partners in global leadership to help define the 21st century.
On behalf of the Obama administration, the Department of Commerce, and the International Trade Administration, we stand ready to partner with India to seize the incredible opportunities ahead of us.
Thank you for listening.