Address of H.E. Mrs. Meera Shankar, Ambassador of India at the Asia Society in New York
February 19, 2010
India-United States Relations
1. It is a truly great honour to speak at the Asia Society on the future of India-US relations. Over the past decade or more, several leaders from both India and the United States have spoken on India-US relations at this august institution. And, the vision that they have articulated for this relationship and their perspectives on what we have defined and achieved together are really a chronicle of the remarkable transformation in the India-US relationship.
2. Asia Society’s association with India has been deep and broad-based and we are pleased that this relationship has a permanent institutional character in the form of the Asia Society India Centre in Mumbai. The Asia Society Task Force Report on India-US Relations in January 2009 could not have been more timely and your ideas have found echo in the roadmap that our two governments have established during Prime Minister Manmohan Singh’s visit to Washington DC in November 2009 to take the relationship to a new level. I am pleased to learn that the Asia Society is holding its next Asian Corporate Conference in March 2010 in New Delhi with the theme – India: Powering Asia’s Ascent.
3. The first decade of this century has just come to an end. It was a period of unprecedented progress in our relationship, which saw our political dialogue intensify to a new level, our strategic understanding deepen and our cooperation enter new frontiers. Driven by broad-based political support and public goodwill in both countries, we have redefined the paradigm of our relationship and turned the constraints of the past into opportunities for the future.
4. We are at the start of a new decade that holds out many challenges for us, but also, I believe, extraordinary opportunities for our two countries. For India, it is an opportunity to complete the process of our economic transformation that gathered steam in the past decade.
5. After a global-recession induced slowdown to 6.7% in 2008, our economy is now poised to grow at 7.5% in the current fiscal year, which will end in March. With a domestic savings rate which is now over 37%, and a domestic investment rate which has grown to 39%, we are optimistic that we can soon quickly return to a long-term growth path of 8-10% per year.
6. Our overwhelming priority is not only to accelerate our economic growth, but to make it inclusive; to ensure that the fruits of progress reach the farmer in the farthest village as much as it transforms the lives of the urban middle class; that it brings change and creates opportunities across the regional and social diversity in India. We recognize that it is broad-based economic development that will sustain the long-term growth that we aspire to and enable us to make our democracy the instrument of social transformation and empowerment that we wish it to be. The growth rates that we have achieved in recent years gives us the inspiration, and the consensus that has evolved gives us the confidence to bring inclusive growth at the center of our policy.
7. Already one of the world’s largest economies in terms of purchasing power parity, sustained growth will catapult India to one of the three or four largest global economies in the early half of this century. A significant aspect is that our growth is driven largely by domestic demand and domestic savings, making India an attractive economic opportunity and an anchor for global economic stability.
8. Deepening of India-US trade and investment ties have been a natural outcome of India’s economic growth and increasing global integration. Our economic ties, although still relatively modest, have been growing at a rapid pace. Our merchandise trade grew more than three times in the last decade. Trade in the much scrutinized services sector was also broadly balanced with India exporting $12 billion worth of services to the US in 2008 and US services exports of $10 billion to India. The importance of the US as a source of investment and a trading partner is well known. But, a new phenomenon has been the surge in Indian investments into the United States. In fact, on the basis of annual flows, Indian foreign direct investment in the US exceeds US foreign direct investment into India in recent years. In 2007-08 alone, an estimated US$ 10.25 billion was invested by Indian companies in the US. Indian FDI is across a broad range of sectors from Information Technology to hotels to steel to automobiles. A significant part of this investment is in the manufacturing sector, which demonstrates confidence in the industrial future of the United States.
9. India-US economic ties have had an impact that goes beyond the realm of business. Partnerships between Indian and American firms, big and small, have helped shape the knowledge economy. This has had a strong modernizing influence on India, especially through the development of India’s IT sector, and has helped to keep US companies competitive and profitable, not only in information technology, but across a broader range of industries and services. Just as Indian firms have gained globally through this partnership, there are many US firms that have survived or become more competitive and profitable, because of the extraordinary synergies in this partnership. As US companies have outsourced to India, many Indian ventures have tapped top-end US companies to meet their own requirements. These partnerships exist not merely because of comparative costs, but because they genuinely involve complementary skills and resources. Jobs and opportunities have flowed in both directions.
10. Our economic ties are growing in a balanced manner, creating an economic partnership that is based on mutual benefit, not mutual vulnerabilities. And, because our intensifying economic ties are so people-centric, they have had a profound impact on the way Indians and Americans perceive each other.
11. As the Indian economy grows and the US economy rebounds, I have no doubt that our trade and investment flows would multiply exponentially and that we could be amongst the U.S’s top 10 partners in the medium term. But, I see this relationship not merely in terms of the slope of the graph, but as a partnership for creating technological leadership for our two countries, for shaping the nature of economy and business in the 21st century and for finding solutions to the pressing socio-economic challenges that now increasingly confront our two countries, although in differing dimensions.
12. The United States will remain the world’s largest economy in the foreseeable future, and will continue to be a well spring of research, innovation and enterprise. India’s own liberalization and growth, and the sheer magnitude of the challenges that we face, have unleashed a wave of innovation in products, institutions and systems in both urban and rural India, in modern and traditional industries, in globalised corporates and women’s self-help groups.
13. So, as we look to the future, we have enormous opportunities to work together to create productive partnerships and address common challenges in a wide range of areas.
14. We face similar challenges of dependence on energy imports and fossil fuel and we both recognize the importance of addressing the challenge of climate change. In India, we have a long-term perspective plan on energy and an ambitious National Action Plan on climate change, which seek to increase the share of clean and renewable energy in our energy mix, increase energy efficiency across the economy and expand our forest cover. We have set ambitious voluntary national goals including 20,000 MW of solar energy generation by 2020. While the energy intensity of India’s economy has come down and at 0.15 Kg of oil equivalent is now on par with the best in the OECD, we seek to reduce this further by 20 to 25% by 2020. India and the United States already have a comprehensive bilateral Energy Dialogue and, in November 2009 Prime Minister and President Obama agreed to launch a Clean Energy and Climate Change Initiative to advance cooperation in clean and renewable energy, and energy efficiency. The success of this Initiative will enhance the ability of India and the United States to provide new economic opportunities for their people and create new clean energy jobs. The civil nuclear agreement which was both a symbol of and instrument for the transformation in our relationship has opened enormous new opportunities not only to boost bilateral economic ties but also address our shared concerns on energy security and climate change. We aim to increase our nuclear energy generation from 4,000 MW at present to 20,000 MW by 2020. This would be scaled up further as our efforts to develop thorium based nuclear reactors reach fruition. India is today the most competitive producer of small nuclear power plants. As worldwide interest in nuclear energy revives, including in the US, India looks forward to building productive international partnerships in this field.
15. As space assets become increasingly important for communication, managing resources and economic activities, India and the United States have made a promising start for cooperation. India’s Chandrayan-I Moon Mission carried a US experimental payload which identified the presence of water on the moon for the first time. There are exciting possibilities for India and the United States in this new frontier, and we should work together to put in place a framework conducive for our space partnership to flourish.
16. In order for India and the United States to fully realise the potential for high technology commerce and shared endeavours in innovation, a facilitative export control framework in the US would be crucial. This would act as a great catalyst for increasing our trade and cooperation in defence and high technology. Our defence acquisitions from the United States have gone from a negligible level a decade ago to a point where we have placed orders worth USD 3.6 billion in the course of the past two years. The potential is enormous as India seeks to diversify its defence acquisitions and build its defence production capabilities with a larger role for the private sector, including 26% Foreign Direct Investment.
17. As the challenge of social development moves increasingly to the centre of Indian national policy, we see the US as a valuable development partner, particularly in the fields of education, agriculture and healthcare.
18. In the field of education, India has embarked upon the largest and most far-reaching reform and expansion of the education sector since Independence. We would certainly like to benefit from the excellent US university system. Drawing strength from an impressive history of individual and institutional links in the education sector, we can turn education into an area of strong and mutually beneficial cooperation. The Singh-Obama Knowledge Initiative announced during Prime Minister’s visit would be one important instrument for this purpose.
19. We need a new global thrust to increase food production and achieve the right balance of crops. In the past, the India-US partnership ushered in the Green Revolution in India. Our cooperation must now catalyze a new revolution in food production that raises productivity and reduces risks.
20. Our two countries are already laying the foundation for robust cooperation in the field of healthcare, medical research and developing vaccines for major global health challenges.
21. Both developed and developing countries will increasingly face the challenge of expanding and renewing infrastructure for the 21st century. It will be critical to India’s ability to sustain its growth. We need to invest $ 500 billion dollars in the next five years in the infrastructure sector in India, and another $ 500 billion in the subsequent five years. India has advanced considerably on the learning curve for creating the right institutional, legal, financial and market mechanisms to stimulate private public partnerships and greater private sector participation in this ambitious task. We look to more active engagement by US companies in the huge business opportunities in this sector which could also act as a stimulus for their domestic economy.
22. As India seeks to pursue its national development goals, its stake in a stable global order, a peaceful neighbourhood, an open and equitable international trading regime, secure and affordable energy supply have increased immensely. For us, that challenge begins in our immediate neighbourhood, where our vision of collective South Asian prosperity is threatened by violent extremism, instability and uncertain political transitions in fragile states. Success in Afghanistan is critical to the future of the Afghan people, but it is equally vital for turning the tide on violent extremism and terrorism, which threatens our security and challenges our secular vision. We know that the road to peace in Afghanistan will not be easy nor will the task be accomplished quickly. We are encouraged by the renewed commitment of the international community to Afghanistan. We must stay the course and ensure that the path that we choose in the days ahead does not lead back into the dark alleys of the 1990s.
23. India has been part of the international effort to help in the reconstruction and development of Afghanistan through our assistance of USD 1.3 billion which has helped build vital infrastructure, schools, healthcare units, irrigation projects, support agriculture and develop human resources and government institutions. At London, we announced our intention to further assist the agriculture sector though 200 scholarships for undergraduate and 100 scholarships for post-graduate studies in agriculture. We are gratified by the goodwill and appreciation that we have received throughout Afghanistan.
24. We are guided by our civilizational links with Afghans, enormous mutual goodwill between our people and our legitimate interest in seeing Afghanistan emerge as a successful state. We do not see Afghanistan as a theatre of influence, or as a platform for regional competition, but as a future hub of regional stability, trade and transit connecting Central and South Asia. And, we believe that all stakeholders in the region and beyond must work towards that common vision for Afghanistan.
25. India has vital stakes in a stable, moderate and prosperous Pakistan. As neighbours, India and Pakistan have no choice but to live in peace and harmony, and to seek a future defined by the power of cooperation rather than the perils of conflict. Our abiding commitment to pursue that goal was demonstrated once again in our recent offer of talks with Pakistan. The Foreign Secretaries are to meet on February 25 in Delhi. It is important that Pakistan acts resolutely to prosecute those who were responsible for the Mumbai terrorist attack and towards dismantling the infrastructure of terrorism that has developed there.
26. Terrorism remains a pivotal challenge for us. We see that groups that once seemed to have different targets, are now increasingly bound by ideology, motivation, location and use of infrastructure. As these groups become increasingly fused together, our response must be equally comprehensive and non-selective.
27. Stability in the oil producing regions of the world, the security of sea lanes around us in the vast Indian Ocean region, and the security of global commons that increasingly shape our economic life, are all concerns that increasingly affect our interests and demand India’s attention.
28. As we have integrated into the global economy, we are rediscovering our traditional, sometimes even ancient interests in South East Asia and West Asia. In the broader sense, Asia is undergoing immense transition and change, which is reordering relations between Asian countries, the role of extra-regional powers and their relationship with rising Asian powers. We must work towards the evolution of an open, inclusive architecture of economic and security cooperation in Asia, which accommodates the interests of all countries that have stakes in the region’s security and stability.
29. The India-US relationship has drawn great strength and direction from our increasingly convergent security and strategic interests. We have shared interest in security and stability in the Asia-Pacific region; combating violent religious extremism and terrorism; confronting the formidable new risk of nuclear terrorism; elimination of terrorist safe havens in India’s neighbourhood and achieving stability in Afghanistan; safe and secure access to the sea-lanes of communication; and securing cyberspace and outer space.
30. Over the years, and increasingly in recent times, our cooperation in defence, counter-terrorism and intelligence sharing, and our broader strategic dialogue, have seen significant progress.
31. Our militaries, once unfamiliar with each other, now hold regular dialogue and joint exercises in the air and on land and sea. Our counter-terrorism cooperation, including intelligence sharing, have deepened, after the Mumbai attack, not only in terms of engagement between our agencies, but also in the perception of our people and the political leadership on the importance of this engagement
32. As India and the United States increasingly work together to address global challenges, we must also work together to reform the international architecture of global governance. We are already moving towards a more representative mechanism to manage global economic and financial problems, but we need to reform the institutions that deal with political and security challenges both in the interest of greater legitimacy and greater efficacy. As the world’s second most populous country with one of its fastest growing economies and as a democratic nation, rooted in a strong tradition of pluralism, both in its society and in its outlook to the world, India is willing to assume its responsibility to meet the global challenges of our times.
33. All these aspects of our relationship – the global strategic framework, our converging security interests, the vitality of ties between our people and businesses, the enormous promise of economic partnership and the immense potential to work together on a range of global issues – came together during the visit of Prime Minister Singh to Washington DC in November 2009, during which Prime Minister Singh and President Obama outlined a vision of the relationship, which reflects our political and strategic convergence and the extraordinary breadth of our bilateral agenda.
34. As we move forward, I am confident that we will see an enormous growth in our economic ties and in our cooperation across the full spectrum of our agenda.
35. As we deal with the emerging strategic challenges, India and the United States must and, I am confident, will continue to speak to each other with the transparency, trust, candour and confidence that has characterized our relationship in recent years. We should continue to be sensitive and accommodative of each other’s vital interests and work together to achieve our common goals in Asia and beyond. I also think that as we enter the next phase of the relationship, we must address the question of technology transfer, both defence and dual use, in a manner that reflects the strategic partnership in the same way that we addressed the challenge of civil nuclear energy cooperation. That will open the door to boundless possibilities.
I am confident that our relationship will continue to gather strength and momentum and meet the expectations of our leaders and our people to become, as President Obama said, one of the defining partnerships of the 21st century.