June 21, 2019
Ladies and Gentlemen, I am delighted to be here to release the India Report of the Bay Area Council titled - Bay Area-Silicon Valley and India; Convergence and Alignment in the Innovation Age. The report is certainly an effort to bridge the gap in our understanding of how two growing economies and communities - India and Silicon Valley - have been interacting, and what those interactions now hold for our future. It is my hope that with this report's release, we will now have a foundation upon which policy-makers, business leaders, civil society and young entrepreneurs can engage and build pathways for mutual benefit.
2. At the outset let me thank the Bay Area Council and its India focus led by Nandini Tandon. I must also thank Sean Randolph and his team at the Economic Institute for making this detailed report covering thematic areas and the data it brings to the public domain. Though we may not agree on every view expressed in the report, I must appreciate that it is penetrating in its insights.
3. India today is undergoing economic, social and technological changes at an unprecedented scale in human history. 1.3 billion people are striving for growth, security, technological advancement, democracy and openness. Towards this end, this government is looking at further economic reforms, reduction of bureaucratic processes, creation of physical and human infrastructure, education, health and social welfare for our disadvantaged communities and an ambitious foreign policy agenda. India witnessed its best phase of macro-economic stability in the past 5 years. We are now the 7th largest economy in the world and hope to be the 5th largest by the end of this year. In terms of size, India is targeting to become a $ 5 Trillion economy in the next five years and aspires to become a $10 Trillion economy in the next 8 years thereafter. This period also witnessed a rapid liberalisation of the FDI policy, allowing most FDI to come through the automatic route.
4. Under Prime Minister Narendra Modi, we are witnessing an acceleration of bold reforms across all spheres of socio-economic activity - Taxation, Foreign Direct Investment, Capital Account Convertibility, Land, Labour, Insolvency and Banking. The path breaking Goods and Services Tax (GST) is one such reform that has integrated India economically into one unit. The flagship programmes of 'Digital India', 'Make In India' and 'Startup India' along with the rollout of a biometric ID scheme Aadhaar for all of our citizens and the creation of bank accounts for more than 350 million new users are energizing and formalising India's economy and governance structures. Results are beginning to show. For instance, in 2018, India climbed 23 spots to rank at No. 77 from a rank of 100 in 2017 in the World Bank's Ease of Doing Business Index . In the 2018 Global Competitiveness Report released by the World Economic Forum, India registered the largest gain by any country in the G20. India has also been steadily rising in the Global Innovation Index.
5. Ladies and Gentlemen, India is a young nation. The average age in India will be 28.2 years in 2028. India has more than 50% of its population below the age of 25 and more than 65% below the age of 35. We had 560 million internet subscribers in 2018 and Indians downloaded more than 12.3 billion apps in 2018. By 2025, we expect to have 900 million smartphone users. Today, Indian mobile data users consume 8.3 gigabytes (GB) of data each month on average, compared with 5.5 GB for mobile users in China. The e-commerce sector is projected to grow at a 30% annual rate.
6. Prime Minister Modi has activated a set of schemes to upgrade India's roads, ports, railways and waterways to bring down the cost of logistics. The opportunity for investment in India's infrastructure sector alone stands at $1.4 trillion. In FY 2017-18, India constructed roads at a pace of 27 kms (18 Miles) a day. Close to 200 projects are underway in the ports sector and the civil aviation sector is registering double digit growth. We also have the Smart Cities programme that aims to bring modern applications to cater to 21st century citizen needs. Several large and small Silicon Valley companies are an integral part of this programme. The Government of India has set itself a target of building 20 million affordable houses by 31 March 2022. Recognising the need for affordable health care, Prime Minister Narendra Modi launched Ayushman Bharat, or the National Health protection Scheme, the world's largest government-funded healthcare scheme to cover nearly 500 million disadvantaged Indians. More than 15,000 hospitals are empaneled under this scheme and 50% of those are from the private sector.
7. However progress cannot be made at the cost of the environment. As the world's third largest power generator, we are on our way to meet our pledge to generate 40% of our electricity from renewables by 2030. India has been at the fore-front for taking forward the International Solar Alliance and installed solar generation capacity has grown over 10 times in the last five years. India is poised to achieve target of 175 GW energy from renewables by 2022.
8. Coming to the India-US relations, we have a broad-based strategic partnership, underpinned by shared interests, democratic values and strong people-to-people ties. PM Modi has visited US five times as PM. During the last visit in June 2017, President Trump and Prime Minister Modi committed to further expanding and balancing the trade relationship and to removing obstacles to growth and jobs creation. They also resolved to pursue increased commercial engagement in a manner that advances the principles of free and fair trade. Bilateral trade has reached $142 Billion in 2018 growing by more than 13% in one year over the $126 Billion we had in 2017. Trade deficit for the US came down to $24.2 Billion, a decrease of 11.3% in one year. New Areas of Trade have opened especially in energy exports (expected to be $5.5 Billion in 2019) and civilian aircrafts valued at over $39 Billion.
9. The potential for the India-US trade and economic relationship is huge and I call upon the companies in the Bay area to become partners in the Indian growth story. First, as a source of capital. In order to achieve the growth trajectory that we have set-out for ourselves, we need adequate funding to be channelized in all critical sectors of the economy- be it infrastructure, manufacturing, housing , health, education etc. Second, as a source of cutting-edge technology in the upcoming areas such as artificial intelligence, automation and robotics, semi-conductors, biotechnology, nanotechnology, Electric vehicles and battery storage technologies. US technology can also help in other areas that have economic value such as space exploration, space mining, renewable energy, healthcare and life sciences, aerospace and defense, agriculture, water through innovation. Third, as a source of employment generation and increasing trade for the mutual benefit of both the countries.
10. The US-India strategic partnership has strengthened significantly during the past two decades, based on a convergence of strategic interests, and the United States and India continue to use their deepening relationship to build new partnerships within and beyond the Indo-Pacific. An important pillar of our partnership is our shared vision of an open, stable, secure and prosperous Indo-Pacific Region. Speaking at the Shangri La Dialogue in Singapore in June 2018, PM Modi said, "For thousands of years, Indians have turned to the East. Not just to see the Sun rise, but also to pray for its light to spread over the entire world. Human-kind now looks to the Rising East, with the hope to see the promise that this 21st century beholds for the whole world, because the destiny of the world will be deeply influenced by the course of developments in the Indo-Pacific region".
11. In June 2016, the US designated India as a Major Defense Partner. The designation seeks to elevate the US defense partnership with India to a level commensurate with that of the United States' closest allies and partners. The establishment of the India- US 2+2 Ministerial Dialogue in September 2018 also serves as a tangible demonstration of commitment to promoting the shared principles between the two countries. The India- US defense partnership continues to pursue a range of initiatives to enable cooperation, strengthen inter-operability, and establish a strong foundation for defense trade, technology sharing, industrial collaboration, and broader cooperation on defense innovation. The signing of the Communications, Compatibility and Security Agreement (COMCASA) in 2018 represents a significant development in India-US military-to-military relationship, facilitating greater inter-operability and real-time secure information sharing. Both the countries have increased the scope, complexity, and frequency of our military exercises.
12. One of the hubs of the Defense Innovation Unit (DIU) is in San Francisco and as you are aware, the DIU is a DoD establishment that interfaces and contracts with tech companies offering solutions in a variety of areas, from autonomy and AI to human systems, IT, and space, to solve a host of defense problems. From the India-US bilateral defense cooperation perspective, there are ongoing discussions between the Indian Ministry of Defence and the DIU under the bilateral Defense Technology and Trade Initiative rubric for establishing a collaborative process leveraging the potentiality of this architecture.
13. Ladies and Gentlemen, we recognise deeply, the role played by Indian immigrants to the US since the early 1900s. The San Francisco Bay Area has welcomed them and California is today, the leading destination state for Indian immigrants who number more than 700,000. According to the US Department of Homeland Security's March 2019 report, 22112 out of 209,000 Indian students in the US, study in California making it second most desired destination for them in United States. Indian tourists to the Bay Area number close to 400,000 and spend close to USD 800 million. We acknowledge with respect, the exemplary role played by Indian immigrants in California and the Bay Area - aerospace and defence engineers, doctors, lawyers and farmers, tech-workers and entrepreneurs and patent-filers, motel owners, artists, community workers, activists, elected officials and students - who are everyday Ambassadors for India and also the flagbearers of a thriving India-US relationship. I am happy to note that this report outlines in detail, linkages that have risen between Stanford, UC Berkeley, UC Davis, UCSF and other universities with India across sectors such as health, energy, agriculture and entrepreneurship. The contribution of Indian-Americans in bridging Silicon Valley and India is a common thread running through the report.
14. As the report suggests, India's third wave of venture capital investment shows maturity with US-based firms now steadying their local presence with dedicated India funds and shifting decision-making to local partners. A whole new breed of 10 Indian startups have become unicorns in 2018. This should interest more VC funding from Silicon Valley. The report cites data from FDI Markets noting that 980 direct investments with a value of USD 26.5 billion were made by California companies in India from 2003-18. 432 companies from the Bay Area accounted for 796 of those deals. Emphasizing that this is not a one-way street, nearly USD 15 billion was invested by Indian companies in Bay Area cities in the same period. Similarly, Silicon Valley is playing an instrumental role in shaping India's startup ecosystem through its network of VCs, incubators, accelerators and mentors. There are hundreds of established or budding partnerships between Silicon Valley and the Indian startup ecosystem. The recent moves by Startup India to ease tax restrictions for investors in startups would certainly be of relevance to this region.
15. India offers further opportunities for Silicon Valley companies in healthcare and life sciences, energy, IT, Smart Cities, Fintech, Telecom, Semiconductors and AI, as the report rightly identifies. Products and services that use AI for social innovation - applications in agriculture, irrigation, drinking water, education, life sciences, etc, are vital for the next phase of India's development. There isn't a better regional partner than Silicon Valley for us in this arena.
16. I am happy to note that the report devotes a section to India's states. Some of our large states have country-sized populations and they are distinct and diverse from each other, linguistically, culturally and developmentally. The Union Government annually ranks states on several parameters including on competitiveness, Ease of Doing Business and startup policy. This is leading to competitive federalism, between them and states now are exploring international partnerships and opportunities and innovation exchanges in a manner not seen so far. So while Andhra Pradesh has become a sandbox for Free Space Optical Communications (FSOC) trials, Arunachal Pradesh has an MoU with Planet Labs. Our Consulate here is busy welcoming visiting delegations from India, and most of them, I am aware, are from our state Governments and entities.
17. Ladies and Gentlemen, as India navigates an economic path of high growth amid pains in global trade and value chains and while facing global headwinds of uncertain demand, we look to Silicon Valley not just as a partner, but as a friend. We in Government stand ready to facilitate this partnership and trouble-shoot issues that may arise from time to time. I thank the Bay Area Council for this timely and valuable report that painstakingly documents the existing relationship between the Bay Area and India. As I said before, this report gives us a foundation to build upon. I shall leave you with Governor Newsom's words when he visited Bangalore as the Mayor of San Francisco in 2009 - "70% of the world's population lives within a five hour flight from India. If you're going to be a globalised company, you have no choice but to be in India".