Deputy Chief of Mission, Ambassador, Arun K. Singh keynote address 'Mumbai -The trauma of Terror: Business as Usual' at the Fairfax County Chamber of Commerce
January 12, 2009
The Deputy Chief of Mission, Ambassador Arun K. Singh delivered the keynote address at a panel discussion on ‘Mumbai – The trauma of Terror: Business as Usual’ organized at the Fairfax County Chamber of Commerce on January 12, 2009. More than a hundred representatives from various business houses in Fairfax Country attended the luncheon meeting.
Some highlights of the keynote address by Ambassador Singh:
India’s Growth story:
· Though India’s economic growth this year will slow down – from the remarkable 9 plus percent over last two years – the expected 7 % growth is still healthy, particularly against the global slowdown.
· Macroeconomic fundamentals of Indian economy are stable – with Foreign Exchange Reserves at 255 billion (January 9, 2009), Inflation: down to 6 % from a peak of 12% in August 2008, Food grain stocks at 31.73 million (September 2008).
· Policy environment – there has been a steady focus on liberalization.
· More than 50% of the Indian population is under 25 years of age.
· Report on the Indian consumer market by the McKinsey Global Institute entitled “The Bird of Gold” predicts “explosive” growth in consumer spending in the next two decades, taking the market to $1.5 trillion, making it fifth largest consumer market by 2025.
· India’s Foreign Trade sector is showing resilience in face of the global economic meltdown. Exports growth has dipped, but is expected to still cross 20%, while growth of imports has hardly declined.
· Foreign Direct Investment (FDI) registered a record level of US $ 25 billion in 2007-08 and stands at US $ 19 billion for the first seven months of the current fiscal year.
· The robust economic health over recent years has made Indian industry confident and Indian investments abroad are increasing steadily. In 2006, the outgoing FDI exceeded the incoming FDI. The reported value of mergers and acquisition deals by Indian companies during July –September quarter in 2008 grew by 73.6% to touch US $ 9.2 billion, compared with 5.3 billion in the corresponding period in 2007. According to Grant Thorton’s monthly report, 35 deals worth 3.69 billion were signed in September 2008 alone.
· Robust financial system remained unaffected. Bombay Stock Exchange closed just for one day. It literally shrugged off the attack as the Bombay Stock Exchange benchmark Sensex closed 66 points higher. The wide-based National Stock Exchange index Nifty also rose.
· Democratic processes in India continued to function smoothly with elections in 5 states within days of the attack and subsequently in the state of Jammu and Kashmir which saw around 70% participation.
· Mumbai attacks did not disturb law, order and governance. Security systems were promptly reviewed and are being upgraded as required.
· Return to normalcy was quick. The Taj Mahal Hotel and The Oberoi Hotel targeted in the attacks reopened within less than a month (on 21st December).Return of English Cricket team for test matches and successful organization of Volvo boat race in Kochi also illustrate this fact.
· These attacks were really an attack on the values that India and US share and choice of Mumbai reflects the effort to target India’s economy, including growing economic collaboration with the US.
· None of the factors underlying India’s growth story were affected by Mumbai attacks as the source of terrorism lay outside India’s borders.
India-US commercial & economic relations
· The statistics reveal a very healthy trend in India-US merchandise trade with US exports to India having increased by 26% in 2006, 75% in 2007 (making India the fastest growing export destination for the US) and 16% in the first ten months of this year. Indian exports to US are doing well too – with a rate of growth of 16% and 10% respectively.
· Bilateral investment between India and US is also increasing. Most of the US investment is taking place in services and research areas through private equity, hedge funds, venture capital funds and through other financial institutions in Indian companies. The cumulative Foreign Direct Investment (FDI)inflows from the US from August 1991 to March 2008 amounted to $4.53 billion constituting 8% of total FDI into India. Foreign Institutional Investment (FII) from the US has also been on a steady growth path.
· Indian companies are reported to have entered into investment deals in the US amounting to over $ 18 billion in the period 2004-08 in steel, aluminum, hotels, pharmaceutical, software and engineering sectors, providing jobs to a large number of people.
· Both governments recognize the importance of increasing the participation of Small and medium Enterprises (SMEs). Last year a SME summit was held in Chicago in February. Five Indian SMEs from IT and Electronics sector would be setting up their offices in the George Mason University’s incubator very soon. Ambassador Singh expressed the hope that SME companies of Virginia would also similarly reach out to India and would leverage India’s many strengths to mutual benefit.
· There had been impressive progress in India- Virginia economic and commercial ties witnessed in the last few years, which led to a focus on India in the 60th edition of Virginia Annual Trade Conference held in October 2008.
Other speakers at the luncheon were Paul Grossman, Director at the Virginia Economic Development Partnership, Michael DiPaula-Coyle, Director at the USIBC and Dan Howard of Lockheed Martin.
More than a hundred representatives from various business houses in Fairfax County attended the event.