Speech to the Third Indo-U.S. Economic Summit
Speech to the Third Indo-U.S. Economic Summit
Mulford, U.S. Ambassador to India
Remarks as prepared for delivery
Le Meridien Hotel, New Delhi
September 13, 2006
I want to thank President Prabhakar, Executive Vice President Pahwa, Vice President Sobti and the Indo-American Chamber of Commerce (IACC) staff for sponsoring this third Indo-U.S. Economic Summit. I and my Embassy staff greatly value our close working relationship with the IACC. I am also glad to see our good friends Suneeta Reddy and Analjit Singh here today.
I especially want to thank Minister Mukherjee for coming to address this important event promoting closer U.S.-India economic ties.
The United States and India are building the foundations of an historic partnership.
President Bush's India policy is premised on the belief that no other relationship will be more important in shaping the world of the 21st Century. It is a relationship based on shared interests and shared values and touches a wide variety of areas.
Our defense relationship has expanded dramatically in just a few years and we are working together to combat terrorism, a threat to both our countries; the bombings in New Delhi, Varanasi, Mumbai and Malegaon underline the urgency of this task.
India is rising even faster than many expected. Economic growth remains consistently strong; new investment is coursing in; our growing trade relationship has expanded 22% so far this year alone and 20% last year.
Most recently, a key element of our cooperation is the U.S. - India Civilian Nuclear Agreement.
U.S. - INDIA CIVIL-NUCLEAR AGREEMENT
Â Â *Â Help India meet its long term energy needs and manage its rapidly growing demand for hydrocarbons; Â Â *Â Regularize India's relations with other nuclear regimes and position India to play an enhanced role in the international system; Â Â *Â Stimulate opportunities for U.S. and Indian businesses; and Â Â *Â Enhance our scientific cooperation.
India's recent debates in Parliament and the legislative process in the U.S. Congress show the power of democracy in forging an initiative that will so fundamentally alter our relations.
The Prime Minister's Parliament speeches reflect India's growing confidence to become a leader in international relations and a major player in civilian nuclear power.
Implementing this agreement requires a change in U.S. law.
Legislation is moving through the U.S. Congress. Both the House and Senate have marked up bills and voted them out of Committee for floor action by large majorities from both parties. The House has had its floor vote - 359 "for" versus 68 "against." We hope the Senate will vote this month.
If there is Senate action, we believe there will again be a large majority. The two bills must then be reworked in a Conference between the House and the Senate and the final bill must be passed by both Houses for signature by President Bush.
We are working with the Congress to produce an Act that reflects the spirit and terms of what the Prime Minister and President agreed. Our leaders came to this agreement in partnership and they intend to proceed in partnership. President Bush understands the Prime Minister's concerns about certain aspects of the draft legislation and has indicated to him our intention to complete the process.
In the meantime, in order for the change in law to become effective the U.S. and India must complete negotiations on a bilateral Agreement for Peaceful Nuclear Cooperation (known by U.S. lawmakers as a Section 123 Agreement). Ultimately, this must be approved by the Congress in an "up or down" vote which will come after the law has been changed.
We both need to move forward on this legal framework expeditiously, working hard to complete the process before the present Congress completes its term this year.
The changes in U.S. laws will bring about a cascade of revisions in India's international status - opening the nuclear market not only for American companies, but also for the entire international community. This will require the Nuclear Suppliers Group to alter its rules to allow civil nuclear commerce with India. In addition, India will conclude a safeguards agreement and an Additional Protocol with the International Atomic Energy Agency (IAEA), a sign of its commitment to nuclear nonproliferation.
The bottom line here is that India's isolation would end and it would be able to pioneer a new era for its energy needs. The Prime Minister has stated that nuclear reactors could generate up to 40,000 megawatts by the year 2020, an enormous increase in generating capacity that will help India meet its growing demand for electricity without relying on dirty, carbon-emitting coal - improving India's economy and the lives of all Indians.
ECONOMIC COOPERATION AND REFORM
While the civilian-nuclear agreement may symbolize the growing cooperation between India and the United States, it is only part of the accelerating partnership between our two countries. The fundamentals of this partnership are people-to-people and company-to-company based, and it is of profound significance.
An indication of the strength of our ties is the fact that more than 80,000 students have chosen to study in the United States this year. A growing number of American scientists, academics and students are also choosing to focus their research and studies in India.
Other strong indicators of the health of our partnership are measured by the long-term business alliances you are forging with your Indian or American partners, customers or clients every day. Now, investments happening throughout India illustrate the synergies that occur when each economic actor truly benefits.
Examples of such collaboration extend throughout India and across most sectors of the economy. U.S. businesses long active in India's Services, IT, and Manufacturing sectors such as Boeing, GE, IBM, and Ford are making significant new investments.
New companies - and not just established multinational companies - are seeking the Indian market as well. Our Embassy's Foreign Commercial Service office was ranked number one in the world last year in helping close new deals and we expect the same result this year.
We are in the planning stages of a U.S. trade mission in November that may be the largest such overseas mission ever to any country - U.S. business is looking to India and an impressive array of corporate leaders will be coming for that event.
These breakthroughs reflect in part the results of the new policies embraced since 1992 and supported by successive Indian governments. Today's business environment in India is more favorable to trade and investment. But there are signs of a pause in the reform process in recent months. Privatizations have stopped, and political reality suggests that reform of other key sectors and policies of central interest to investors will take longer than envisioned.
It is important to bear in mind there are serious economic costs to any loss of momentum on the reform front. The Prime Minister has expressed his hopes for even higher than 8 percent growth per annum for India. But he has also indicated that higher growth requires continued reforms.
The World Bank still ranks India 134 out of 175 among countries for the difficulties of establishing or operating a business, and U.S. firms have many unresolved legacy issues involving prior investments in India.
We know that there is a substantial body of capital waiting to be invested in India if the right conditions materialize. One needs only to think of the positive impact on the future rate of economic growth from large-scale retail and financial liberalization to appreciate India's potential.
While many of you can tell me tales of your battles with the bureaucracy, you would not be in this room if you did not also have impressive success stories to share.
India has one of the most rapidly growing stock exchanges in the world, attracting large FII inflows that reflect portfolio investor interest in India's near-term performance. Slow growth of FDI, on the other hand, "bricks and mortar" investment, reflects continuing investor concerns about governance issues and India's reform process.
The U.S. is the largest Foreign Direct Investor in India, a considered bet on this country's future. US investment here continues to grow, and we want to accelerate it.
You are certainly part of the reason that U.S. - Indian trade has already increased by 22 percent this year. Due to your efforts we are well on target to achieve our goal of doubling Indo-U.S. trade in three years.
You will certainly be part of the solution if India is to advance in the three critical structural areas that are necessary to sustain the growth rates of recent years, create jobs and improve the lives of average Indians. These are:
Â Â *Â energy Â Â *Â infrastructure Â Â *Â agriculture
American firms can help India meet these structural challenges. In energy, India has set an ambitious goal of almost doubling energy production over the next six years. American firms are world leaders in clean coal technology, power transmission and electricity production and can help India meet its future energy needs.
The U.S.-India energy dialogue and its five working groups - civil nuclear, coal, oil and gas, power, and renewable energy - are working toward the end goal of encouraging private sector participation in energy development.
A sound physical infrastructure, whether in roads, industrial and office buildings, housing, telecommunications, or simply moving documents and products quickly, is essential for India in the 21st Century.
The solution to attracting much greater private sector investment in energy and infrastructure development is a blend of policies that includes better governance, market sensitive regulatory regimes, continued liberalization of the financial sector that enables foreign and domestic private capital to finance major projects, and the timely resolution of investor-state disputes.
The next meeting of the U.S.-India CEO Forum will take place in New York on October 25 to review progress made by both governments on the recommendations presented last March to the Prime Minister and the President targeting significant blockages to greater economic activity between our two nations. Both Governments need to demonstrate tangible progress if the Forum is to remain relevant.
Ultimately, the pace of future growth in India will hinge upon the continued sound economic policies of the Indian government, and of those state governments who are seriously committed to attracting foreign trade and investment.
Our two countries have come a long way together in the past two years - and there is so much more to come. This progress is due to the vision of our two leaders but also to the vision and energy of people like you.
On the civilian nuclear deal, I want to leave you with this: The procedural movements and debates in American politics are often baffling to our friends around the world, but we will honor the agreement that has been reached. The goal posts are not being moved; it is a civil nuclear agreement and when finally implemented will mark a new level of trust and cooperation in our partnership.
On economic policy, I want to emphasize that India is drawing more serious attention from international capital than ever before in its history - a tribute to the ingenuity and dynamism of its people and institutions. To sustain the growth of trade and investor confidence, it is important for the government to stay the course with the reforms the Prime Minister and his team have mapped out.
America will be your partner here, too. That's the bottom line and this has to be good news for both of us.
Released on September 13, 2006