AS PREPARED FOR DELIVERY
Saturday, November 6, 2010
CONTACT OFFICE OF PUBLIC AFFAIRS
Commerce Secretary Gary Locke
Remarks at U.S.-India Business and Entrepreneurship Summit, Mumbai, India
There is simply no better place in India to talk about the importance of an entrepreneur-driven economy than Mumbai, because there are few cities in the world that rival Mumbai’s innovative spirit.
New companies are growing up next to international powerhouses like Larsen and Toubro, the Tata Group and Reliance Industries and Reliance ADA.
This confluence of established companies and new start-ups has positioned India for economic growth envied the world over – projected to be nearly 10 percent this year.
Provided it is nurtured by smart policies, India’s potential is nearly unlimited. And its “inclusive growth” plan makes it an ideal partner for American companies.
It’s important to acknowledge, however, that prospects for shared economic progress would be impossible without the strong strategic partnership our nations have built over decades – partnership cemented by President Obama’s renewed engagement. Last fall, Prime Minister Singh’s visit to Washington was the first official state visit President Obama hosted. Secretary Clinton’s visit to India last year produced the Strategic Dialogue. And in January, Defense Secretary Gates met with Prime Minister Singh in Delhi to discuss ways to deepen already close security ties.
Collaboration between our two countries is the natural outgrowth of long-shared values and cultural ties. The U.S. and India are the world’s two largest democracies and shoulder a special responsibility to advance the cause of freedom and self-determination throughout the world.
And Indian Americans are central to life and culture in the U.S. They have attained the highest positions in government, business, academia and the arts. India’s influence can be felt all across the U.S. – from film and cuisine to clothing and music. Indian-Americans have made important contributions to nearly every aspect of U.S. life – from the owners of mom-and-pop corner groceries to Indra Nooyi, the CEO of Pepsi. And Indian students enrich the intellectual and social life of college campuses across America.
President Obama is here this week to elevate this already important and closely intertwined relationship to a new level – focused especially on economic cooperation.
It is to that end that I am happy to announce today that I will be leading in early February a high-technology trade mission to India. I’ll be bringing with me U.S. companies – large and small – in search of mutually beneficial opportunities in this vibrant, promising market.
The American business leaders I’ll bring with me will look to capitalize on the progress President Obama makes on this visit – the first by a U.S. president to India during his first term in office.
Expanding our economic relationship holds incredible potential for the entrepreneurs and businesses in both America and India, and offers new avenues for job growth in both our nations.
As President Obama noted in welcoming Prime Minister Singh to Washington last year, the United States and India share a common story:
“It’s the story of two economic marvels fueled by an ethic of hard work and innovation … As leading economies, the United States and India can strengthen the global economic recovery, promote trade that creates jobs for both our people, and pursue growth that is balanced and sustained.”
The question we now face together is how do we make the most of the economic opportunities before us?
The effort to foster environments where entrepreneurs and innovators create ground-breaking products is a foundational commitment we can make to ensure futures of sustainable growth and well-paying jobs.
For America, the renewal of that commitment is central to our effort to rebuild our country’s economic foundation.
In the U.S., we are emerging from the most severe economic downturn since the Great Depression.
After shedding jobs for 22 consecutive months, our private sector has now added jobs for 10 months in a row, and we’ve seen positive GDP growth for five straight quarters. Yesterday, it was announced that private-sector jobs in October increased by 160,000, for a total in 2010 of 1.1 million.
But while our recession was precipitated by crisis in the financial markets, at the heart of the downturn was a failing more deep-seated and pernicious. For too long, policymakers in Washington bet on an economy fueled by a speculation-driven housing market and consumers who were buying more than they earned and saving too little. We lost sight of the fundamentals that made the American economy the global engine of growth.
It’s little wonder then that from 2000-2008 America experienced the slowest job growth of any period of U.S. economic expansion since World War II. It also explains why middle class families lost ground during the decade.
As many of you know, the president’s Recovery Act pulled America back from the economic brink, creating demand in the economy when the private sector and state and local governments couldn’t or wouldn’t spend. This historic legislation put 3 million people to work. But it also served as a down payment to secure America’s economic future. It represents a great bet on the innovative and entrepreneurial spirit of the American people.
- Investments in a 21st century infrastructure and manufacturing; and
- Funding for research and technology, like clean energy, emerging technologies and biotech that will strengthen our global leadership and lead to new industries and new jobs.
As an aside, some have said that the Recovery Act has actually converted the Department of Energy into one of the world’s largest venture capital funds.
Additionally, President Obama announced a National Innovation Strategy, which among other things, calls for doubling the budgets of agencies such as the National Science Foundation, so they could better support basic research at our nation's universities.
The president’s proposed 2011 budget – now being considered by Congress – while freezing domestic discretionary spending overall, actually increases funding for civilian R&D by nearly 6 percent.
At Commerce, this administration’s renewed focus on innovation has meant, among other things
- investing in the deployment of thousands of miles of high-speed Internet infrastructure,
- devising the standards for a new smart electrical grid and
- working to speed up the processing of patent applications at the U.S. Patent Office, so that we can move innovative ideas and products to the market more quickly.
Recommitting American policy to fostering innovation is the key to U.S. economic revival. But for India, even with its rapid growth, doing more to encourage innovation and entrepreneurship represents a path to inclusive growth for a nation where income inequality has grown over the past several decades.
Both our nations have innately innovative economies that, if nurtured, can ensure a future of prosperity as widely spread as it is durable.
It’s a future our two great nations can share.
President Obama, and we at the Commerce Department, see real opportunities to partner with India to help meet the ambitious economic and social goals laid out by the Indian government and embraced by its people. We can do that by increasing trade between our nations and selling more of America’s world-class goods and services to businesses and consumers right here in India.
Two-way trade between our nations last year was $38 billion. Exports to India have quadrupled in the last seven years, and the U.S. is the second-largest market for exports from India, representing $21.2 billion in goods and services. Meanwhile, India is also one of the fastest-growing sources of foreign direct investment in the U.S., totaling $4.4 billion in 2009.
U.S. exports of goods to India so far this year have jumped nearly 18 percent compared to the same period in 2009, and we expect this upward trend to continue.
To that end, earlier this year, the president announced his National Export Initiative, which seeks to double U.S. exports in five years while supporting millions of new U.S. jobs.
There are three sectors in particular that hold strong potential for cooperation and collaboration between Indian and American businesses – industries that can help create new jobs in both our countries. I want to mention those briefly.
The first is energy.
Worldwide, energy is a $6 trillion market, and the fastest-growing sector is the cleaner greener kind.
Developing clean energy alternatives will decrease the use of fossil fuels – the root cause of climate change that threatens every economy on the planet – and meet worldwide energy demand just as it’s poised to sky-rocket.
And, a clean energy industry has the potential to create countless new and sustainable jobs in India and the U.S.
Over the last decade, millions of Indians have uprooted themselves from the countryside and moved out of poverty and into the middle class in cities around the country. Along the way, they have embraced the energy-hungry amenities of modern life, from automobiles to air conditioning.
But this is just the beginning. India has hundreds of millions of rural inhabitants; many of whom will aspire to and achieve the comforts of middle-class living in the years ahead. This story will be repeated in countries around the world – in China, South America and Africa.
To get clean energy to scale, we’re going to have to mobilize and incentivize private sector innovation like never before.
In the next few decades, we need to rebuild and reinvent virtually every industrial activity; from power generation and transportation to manufacturing and construction, to run efficiently and economically with drastically reduced carbon output.
It could be next-generation biofuels, modular nuclear reactors or carbon capture and storage that completely changes the way the world uses energy.
It could be all of the above. Or it could be other innovations that we haven’t even thought of yet.
If history is any guide, the commercialization and real-world application of these technologies will be pioneered by entrepreneurs and private sector innovators. And companies that can collaborate across borders will create immense benefits for the citizens of both their countries.
For example, when an American company comes to Mumbai and wins a contract to build a wind farm, it is, of course, good for that U.S. company, and for American workers as well.
A single commercial wind turbine typically contains more than 8,000 parts, 200 tons of steel and 13 tons of fiberglass. Someone has to design and assemble all those parts.
But it’s also a win for any Indian partner companies and their workers, who will innovate and create alongside their American counterparts, and for the residents of Mumbai who will receive clean, renewable power.
When an American clean energy company finds success here in Mumbai, it creates economic value throughout the supply chain in India and in manufacturing towns across America.
That is the definition of a win-win for the United States and for India.
In the coming days, we will look to make an announcement about a new opportunity for the U.S. and India to collaborate on initiatives to develop the clean energy marketplace and help realize its full potential within India.
But clean energy is just one of many industries that offer incredible opportunities for Indian and American entrepreneurs and businesses to cooperate and thrive.
Over the past few decades, the introduction of innovative medical devices and healthcare products that allow for earlier detection of diseases and for more effective treatment options have markedly changed the landscape of the healthcare sector.
We consider the U.S. medical technology industry one of the crown jewels of the American economy because it improves public health, creates high-paying jobs and is a constant font of innovation that spins off new businesses.
But advanced American technology can fuel economic growth and help both the U.S. and Indian economies.
India has increased imports of medical products by a compounded annual growth rate of about 12 percent over the past 10 years.
This pace of growth is expected to continue, because high-quality medical technology products are increasingly sought after by India’s growing middle class, a population of around 300 million with rising disposable income and higher medical expectations, who will live longer than the generations that came before them.
But to take full advantage of the opportunities of the 21st century, India must also upgrade its physical infrastructure.
Doctors in rural India can seek instant consultations with a doctor in Delhi about a CT scan or X-ray only if there’s widespread high-speed Internet access.
And wind power can only complement or compete with coal-powered energy if India’s electrical grids are modernized.
Basic infrastructure like roads, water and sewage treatment center, hospitals and communications infrastructure also need to be greatly expanded and upgraded.
In 20 years, 68 cities in India are expected to surpass one million inhabitants, and the aggregate annual income of households in urban areas is expected to grow from about $700 billion today to almost $4 trillion by 2030.
As India’s economy ascends the economic value chain, the demand for services that complement an upwardly-mobile lifestyle will become intense.
To meet these demands, India will have to greatly invest in its infrastructure.
And American companies can be terrific partners to help build up India’s infrastructure. . . but only if their goods and services can reach the Indian market.
As our private sector companies and entrepreneurs break free from the grip of the global economic downturn, it’s critical that our governments not pursue policies that slow them down.
So I’ll close by touching on steps the Indian government can take to bolster our bilateral trade, and level the playing field so American companies can conduct more trade with Indian partners and create the kind of growth that benefits both our peoples.
As I talk to American business leaders who are looking to expand their presence in India or enter the Indian market, one overriding concern that I hear is that India’s system of tariffs and other import charges are overly-complex and not developed with enough transparency.
Even as tariffs come down on some items, non-tariff barriers have proliferated. Import licensing, standards and certification and local-content requirements are just a few of the barriers American businesses face.
What’s more, the complicated and opaque rules that govern foreign direct investment too often act to discourage investors from entering the Indian market.
In the long run, these rules will harm rather than stimulate India’s economy by limiting foreign direct investment and imports from the U.S. and other countries – investment and imports of goods and services that can enhance innovation within Indian partner companies and deliver new products and improve the quality of life of the Indian people.
In essence, these barriers, while they may provide some economic comfort in the short term will limit the long-term potential of the Indian economy and hamper the very innovation vital to 21st century economic competitiveness.
Ultimately, all the United States seeks is a level playing field for its companies, where the cost and quality of their products determines whether or not they win business.
It is genuine competition that will drive our entrepreneurs and innovators to solve the great challenges before us.
Our two great nations have a propensity for thinking outside the box and working collaboratively on new ideas and innovations. These are the hallmarks, the necessary predicates to an entrepreneurial society.
They are a testament to both our nations, and will serve both of us well in the years to come.
These shared values add another layer to an already deeply-intertwined political, cultural and economic relationship – one we aim to build on during this visit and in the years to come.
There’s no question we have a lot of work ahead of us. Both our countries face significant and complicated challenges.
But we’re closer to our goals today than we were yesterday. Working even more closely together, the United States and India will reach shared visions of prosperity and opportunity, where our children have big dreams and where those dreams can come true.