Saturday, February 5, 2011
CONTACT OFFICE OF PUBLIC AFFAIRS
Commerce Secretary Gary Locke
Opinion Editorial, The Times of India
"Opening The Door to India"
When President Barack Obama spoke before the Indian Parliament last November, he said: "The relationship between the United States and India - bound by our shared interests and values - will be one of the defining partnerships of the 21st century."
During the president's visit, there was action backing up those words, including $10 billion in job-creating deals between American and Indian businesses and the Indian government; President Obama expressing support for India gaining a permanent seat on the UN Security Council; and an announcement of significant reforms to US export control policies - opening the door for increased high-technology trade and cooperation between India and the US.
This week, I am travelling to New Delhi, Mumbai and Bangalore to help 24 US companies walk through that door. These companies - more than half of which are small- and medium-sized businesses - are leaders in the civil nuclear, defence and security, civil aviation, and information and communications technology sectors. They are eager to find Indian business partners and to help India continue its remarkable transformation.
It was only 20 years ago that India's closed economy was plagued by persistent low growth. But beginning in 1991, Manmohan Singh, then finance minister, began a historic opening up of India to the world. Trade barriers and tax rates came down. State monopolies were broken up. And the licence raj was greatly diminished.
The talent of the Indian people was unleashed, and the results speak for themselves. Annual growth rates of 8-10% became common. And Indian companies like Tata, Wipro, Infosys and Reliance became internationally renowned.
India now has 45 million entrepreneurs - most building small businesses, some building big businesses - but all contributing to an economy that boasts a middle class as big as the entire population of the United States. India has come along faster than anyone would have expected, and there are good reasons to believe these trends can continue. Morgan Stanley predicts that over the next 20 to 25 years, India will grow faster than any large country in the world.
But there are bumps on the road to progress. India faces many challenges in ensuring that its educational system, infrastructure, and other services keep pace with its potential. For example, just 2% of Indian roads are paved highways. The electric grid, water, communications and transportation infrastructure have to be greatly expanded and upgraded.
The McKinsey Global Institute estimates that meeting the needs of India's cities alone by 2030 will require $1.2 trillion in additional capital investment. That's an astounding eightfold increase in today's per capita spending.
The message I hope Indian citizens hear this week is that US businesses can help India achieve its goal of providing a better standard of living for all its people. They can partner with Indian technology companies to build high-speed internet infrastructure, so doctors in rural India can seek instant consultations with a doctor in Delhi about a CT scan. They can provide cutting-edge technologies to modernise India's electric grid and power generating systems so the country can deliver electricity to hundreds of millions of Indian citizens. They can help India build the world's best planes, the roads and the rail lines to help transport Indian-made goods throughout the country and throughout the world.
But for our countries to realise the full potential of our economic cooperation, we hope India will address concerns many US and foreign businesses have about its commercial environment. Even though India has made tremendous strides to open up its economy, there are still too many tariffs and too many barriers to foreign participation in the Indian economy, including limits on foreign direct investment in key sectors, and inadequate protection of intellectual property rights.
These measures explain why India is still ranked only 134 out of 183 countries on the World Bank's Ease of Doing Business Report. India's market barriers may seem to protect some domestic industries in the short term. But over time, these barriers will limit foreign direct investment and imports that can enhance innovation within Indian partner companies, and increase the standard of living for all of India's people.
I know there are fears in some quarters about foreign people, foreign companies and foreign money coming into India. Those fears have sometimes arisen in the United States as well. But the historical experience of the United States, and the recent experience of India, prove that those fears are unfounded.
The United States' key competitive advantage has always been our openness to the best ideas, the best products, and the best businesses, regardless of where they come from. As for India, two decades of explosive growth has coincided with the most ambitious market openings in its history.
If India continues its walk down the path of reform, if it continues to become more open to the investments and the innovations of foreign companies - like the 24 companies i have with me this week - it will stand a much better chance of meeting the needs of its people. And of helping to lead the global economy in the 21st century.