I want to thank TIE and ICC for hosting me this evening. Yours is one of the pioneering initiatives to leverage your extraordinary capabilities to help the South Asian community and create a new generation of entrepreneurs. Throughout history, the River Indus was the frontier to a land of immense riches. Today, The Indus Entrepreneurs have become the new frontier to a world of innovation, entrepreneurship and wealth generation across five continents.
I am always delighted to be on the West Coast – it is, of course, good to escape from the unusually cold and snow-filled winter in Washington DC – but there are more enduring reasons to be here. California hosts the largest population of Indian Americans. It is their innovation, entrepreneurship and skills that made Silicon Valley a metaphor for the exciting possibilities and the new energy in India-US relations. This is a state that is blessed with so much that is the finest in human achievements and natural beauty, that it is always an enriching experience to be here.
Also, here on the west coast, gazing across the vast expanse of the Pacific Ocean, you realize that the United States is a neighbour to Asia and that the fortunes and destinies of Asia and the United States are closely entwined, more so, as the center of gravity of global opportunities and challenges, and the engine of global economic growth, shifts increasingly to Asia. And, it is from here, away from the Euro-Atlantic perspective of India that comes from the east coast, that you get a clearer insight into the transformation underway in India which is at the heart of the change that is running across the immense diversity of Asia.
When we look to the future of India-US relations, we derive enormous confidence from the remarkable transformation in the relationship, especially over the past decade, during which our political engagement has strengthened significantly, our strategic understanding has deepened and our cooperation has expanded into new frontiers, across diverse fields of human endeavour. The strength of ties between the governments is enriched by the vitality of private partnerships and the warmth of ties between our people. It is a relationship that has been invigorated by broad political support and has met the test of public goodwill in both countries.
An audience of entrepreneurs and investors such as this one knows too well that while past trends are a good indicator of future direction, our judgement must, nevertheless, be based on analysis of the factors that will impinge on the course of the relationship in the future.
The United States will remain the world’s preeminent power and its largest economy in the foreseeable future, and will continue to be a font of research, innovation and enterprise. But, this century will see a number of other countries rise and a greater geographic diffusion of power and economic opportunities than the previous one, creating a compelling reason to seek a more cooperative future among the major powers of the world. A comprehensive and intensive engagement between India and the United States will be indispensable not only for our two countries, but also for meeting the global challenges of our times.
India is the world’s second most populous country with the world’s largest young population. Today, every tenth person in the world is a young Indian. Our economy has shown the capacity to grow at 8-9% per year, and with a domestic savings rate in the region of 35%, and a domestic investment rate of around 38%, we are confident that we can return to the high trajectory of 8 to 10% growth, after a global-recession induced slowdown to 6.7% in 2008. 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. Our market will see exponential growth as more Indians are pulled out of poverty and enter the middle class. Our growth is driven largely by domestic demand and domestic savings, making India an attractive economic opportunity and an anchor for global economic stability.
Whether it is economic growth, energy security; clean and renewable energy, or more efficient use of energy, that addresses concerns about global warming; food security to meet the demand of a growing and increasingly prosperous population; and, education and healthcare for an increasingly young India, the choices that we make and the solutions that we find will have a profound impact on the world, just as India’s future will be increasingly shaped by the currents of globalisation and the paths that others pursue.
This holds equally for the future security and stability of the world. Located at the strategic crossroads of Asia, where the different parts of Asia converge, we are also close to some of the most pressing threats of our times and the most important strategic challenges of the future – terrorism, and violent extremism; stabilizing Afghanistan, safety and security of the vital sea lanes of communication in the Indian Ocean region; seeking a cooperative and balanced framework for Asia. And, as Indians live their lives and carry out their economic activities increasingly in cyberspace and outer space, and as we create more infrastructure and assets there, we increasingly share a concern for the safety and security of these new global commons.
Our growing mutual stakes in prosperity and security create a deeper mutual responsibility for India and the United States to engage with each other, and with other major countries, in pursuit of our common interests.
Intersection of interests and need for closer engagement do not automatically translate into harmonious relationships and productive partnerships. Since India-US relations are based, as Prime Minister Manmohan Singh has said, on the pillars of both pragmatism and principles, I do believe that India-US engagement will continue to strengthen, becoming increasingly strategic in nature and global in scope. Our relationship will have stability and strength that comes from the solid bedrock of shared values and common interests, and growing breadth of our engagement.
Our shared values of democracy, pluralism, freedom and rule of law place us in a unique position to meet the challenges of the globalised 21st century in which relentless changes in technologies for information, communication and wealth generation give freedom a new value and meaning, and citizens and non-government organisations a new role in society and international relations.
Our economic partnership is establishing a strong framework for our relationship, defined by mutual benefit, not mutual vulnerabilities. India-US trade and investment ties, although still relatively small, are growing rapidly – and, more important, in a balanced manner in both directions.
Just in the last five years, our trade doubled to USD 44 billion; US exports to India grew three times. 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 $10 billion to India. Today, the US is not only one of our leading trade partners, it is the largest source of technology collaborations for Indian companies and a leading source of foreign investment, though there is scope to do more.
But, equally gratifying, there has been a surge in Indian investments into the United States. In fact, on the basis of annual flows, Indian foreign direct investment in the US exceeds US foreign direct investment into India in recent years. In 2007-08 alone, an estimated US$ 10.25 billion was invested by Indian companies in the US, which, created many new jobs in the US. This trend is expected to continue as Indian companies increasingly seek to position themselves in the global economy. A significant part of this investment is in the manufacturing sector, which demonstrates confidence in the industrial future of the United States.
While bilateral trade and investment have been increasing at a robust pace, the overall levels are still modest, as this growth has been on a low starting base. As the Indian economy grows, our economic engagement with the United States will also grow and we would hope to become amongst the US’s top ten trading partners in the medium term.
Synergies with India have enhanced the competitiveness and profitability of US corporations while contributing to growth and prosperity within India itself. Indeed it was the IT sector which was the first to benefit from the opening up of the Indian economy using India’s talent pool. But even more important than economic numbers, success in this sector had a transformative impact on Indian society, enabling the emergence of a knowledge and merit driven ethos in which “what you knew was more important than who you knew”. We see this partnership of research, innovation, technology and enterprise between India and the United States as a key driver of the relationship in the coming years.
The implementation of the civil nuclear agreement will give a strong boost to bilateral economic ties, besides contributing to our shared objectives of advancing energy security and addressing global warming. Renewable energy, particularly solar energy, and energy efficiency are new emerging sectors where partnerships between India and the United States hold particular promise with India’s objective of adding 20,000 Megawatts of solar energy generation by 2020. We have a nascent, but an extremely promising, cooperation in space, which could expand substantially in the future, as we harness its potential for commercial purpose, environment conservation and development needs. India’s emerging strengths in low cost, high-tech manufacturing can be harnessed to mutual benefit. For instance, India’s Chandrayaan Moon Mission, which carried a NASA experiment that identified water on the moon, was undertaken at one sixth the cost of similar Moon Missions elsewhere. A facilitative US export control framework would be key to realizing this potential.
Across diverse fields – in higher education, science and technology, agriculture and healthcare – we are blessed with complementary resources and skills, and joined together by a common goal of seeking a safer, more prosperous, and more sustainable future for our people. At the heart of this partnership is the expertise and experience that come from people like you and our belief in the innovative potential of our ventures. That is why India and the United States have over 25 bilateral mechanisms to give strategic direction to their deepening cooperation.
Our defence and security cooperation will continue to grow in response to our increasingly convergent interests. After the Mumbai terrorist attack, our long-standing counter-terrorism cooperation has been strengthened, both in terms of exchange of information and capacity building. Our once distant defence relationship has now evolved into a robust and comprehensive engagement. Our militaries conduct increasingly sophisticated exercises in the air and on land and sea. Our defence acquisition from the United States has 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 acquisitions, and build its defence production capabilities with a larger role for the private sector, including 26% Foreign Direct Investment.
As we saw in 2009, India and the United States will also work increasingly together in fostering international cooperation and agreements in global economic management, trade, climate change and sustainable development. Creating a new architecture of global governance, including reform of the U.N. Security Council, that better reflects contemporary realities and future imperatives would be critical and we would work with the US and other international partners towards this objective.
All these aspects of the relationship – the shared values, the global strategic framework of the relationship, our shared security concerns, the breadth of our engagement and the enlarging areas of cooperation – came together when President Obama hosted Prime Minister Dr. Manmohan Singh as his first state guest in November 2009. The visit helped to reaffirm and reinforce our strategic partnership and establish the priorities for the future, including agriculture, education, health, clean energy and energy security, science and technology, in addition to further consolidating cooperation in the defence and counter-terrorism domains.
The world is at a unique moment of transition, when we have a historic opportunity to define its character and orient its direction for this century. In the ceaseless change that we are experiencing, the only certainty seems to be our deepening interdependence, which calls upon all nations, small and large, to work together for a more prosperous, more peaceful and sustainable future for the entire humanity. And India and the United States, through the power of their example and the potential of their relationship, can make their own contribution to this.
In the end, let me say that my confidence in the future of our relationship comes in no small measure from the unique asset that we have in the form of the Indian American community. As I have traveled across the United States, I have been deeply impressed by the frontiers of your achievements and extent of your contribution to your communities here, to the United States and to India. You have been a window to India’s heritage and its progress, a bridge of friendship and a channel of cooperation between our two countries, and a source of innovation and enterprise that has made a deep impact on lives around the world. As in the past, you will continue to be an indispensable part of India-US relations.