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Remarks at CII Luncheon, New Delhi, India

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Monday, February 7, 2011
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Commerce Secretary Gary Locke
Remarks at CII Luncheon, New Delhi, India

The Confederation of Indian Industry has worked extensively with The Department of Commerce over the years, and it’s a pleasure to be back in bustling New Delhi to talk to you.

I'm here this week as the first Cabinet Secretary to return to India since President Obama made his historic visit to New Delhi last November -- a trip that I was privileged to join

Joining me on this trip are 24 market leading American companies in the civil nuclear, defense and security, civil aviation, and information and communications technology sectors.  Fourteen of these companies are small- or medium-enterprises.

In the days ahead, my team at the Commerce Department, as well as colleagues from the U.S. Export-Import Bank and the U.S. Trade and Development Agency will be helping these companies pursue new commercial opportunities in India – and helping U.S. and Indian firms integrate into one another’s supply chains.

In the process, we hope to further strengthen the bonds between the governments, the businesses and the people of India and the United States.

When President Obama spoke to 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.

He added that:

The United States not only welcomes India as a rising global power, we fervently supported, and we have worked to help make it a reality.

Those words have been backed up by action.

In just the last few years, the United States has signed a historic civil nuclear agreement that will help India power its future.

We support India becoming a permanent member of the U.N. Security Council to reflect the reality that India is no longer just an emerging power.  As President Obama said, India has emerged.

And this past November, the United States implemented reforms to our export controls that will treat India similarly to our closest allies and trading partners. 

In the last two weeks, the U.S. Commerce Department removed the last remaining nine Indian defense and aerospace companies from the so-called “entity list.” 

These nine companies include the subordinate entities of the Indian Space Research Organization and the Defense Research and Development Organization.  And further changes to U.S. export control policy toward India will continue in the months ahead.

It’s a step that has made it possible for the 24 companies with me this week to explore new avenues of cooperation and commerce in India.

And as the United States has reached out its hand in partnership, India has reciprocated

India has become a crucial security partner and a force for global stability: joining with us to fight terrorism, assisting with the reconstruction of Afghanistan, supporting global non-proliferation efforts in Iran, and conducting more joint military exercises with America than any nation in the world.

Meanwhile, Indian scientists and researchers work side by side with American counterparts on research into hydrogen, carbon sequestration, nuclear fusion and other technologies to combat climate change.

The scope of our partnership is vast and its importance grows every day, especially on the economic front. 

Between 2004 and 2008, trade doubled between India and the United States. 

And ours is increasingly a partnership of equals. . .

. . . With major U.S. multinationals like Cisco, GE and IBM locating major research and development facilities here, and depending on Indian scientists and engineers to do growing amounts of higher value-added work.

I think the growing respect that U.S. businesses have for India can be summed up by the words of a Cisco executive who said:

We came to India for the costs, we stayed for the quality and we’re now investing for innovation.

And today, I'd like to talk about the next step in U.S.-India economic partnership: about how we can help India meet its ambitious development goals and also provide more economic opportunity and more jobs for people in India and in America.

The fact that India has so quickly become a global destination for capital, for talent and for innovation is a testament to the vision of India’s leaders, and to the entrepreneurial spirit of the Indian people.

It was only 20 years ago that India's closed economy was plagued by persistently low growth.

But beginning in 1991, then Finance Minister Singh began a historic opening of India to the world. 

Trade barriers and tax rates came down.  State monopolies were broken up.  And the license raj was greatly diminished.

The talent of the Indian people was unleashed, and the results speak for themselves. 

Annual growth rates of 8-10 percent have become common. 

Indian Companies like Tata, Wipro, Infosys and Reliance have become 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 farther, 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 continued road to progress.

Although many Indians have joined the global middle class, 800 million Indians still live on less than two dollars a day.  Many are unable to read and lack skills necessary to find suitable employment.

These people need more jobs.  And so too will the 240 million people likely to be added to India's working age population by 2030.

And while the abilities of the Indian people are vast, the capacity of India’s infrastructure is not.

Just two percent of Indian roads are paved highways.

The electric grid, water, communications, and transportation infrastructure all has to be greatly expanded and upgraded.

The future investment demands are staggering.

The McKinsey Global Institute projects that India will need $1.2 trillion in additional capital investment by 2030 to do things like build:

  • 2.5 billion square meters of new paved roads; and
  • 7,400 kilometers of new metros and subways

For India to spend that $1.2 trillion by 2030 would represent an astounding eight fold increase in today’s per capita spending.  That is a heavy lift – but the Indian people need not do it alone.

The message I want every Indian citizen to hear this week is that U.S. businesses can work with you to achieve your ambitious development goals. 

They can partner with Indian high-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 or X-ray.

They can provide state-of-the-art technologies to modernize your electric grid and your power generating systems so you can deliver electricity to hundreds of millions of rural Indians.

They can help you build the world’s best planes and the roads and rail lines you need to transport Indian-made goods throughout the country and throughout the world.

I know they can do this because they've done it in the United States.  They've done it around the world.  And they are eager to do it in India.

But for us to realize the full potential of our economic cooperation, we hope India will address the concerns many U.S. and foreign businesses have about aspects of its business environment. 

Even though India has made tremendous strides to open up its economy, there is much work left to be done.

While many tariffs have come down, others remain, ranging from 19 percent levies on civil aviation aircraft and 30 percent on pistachios to 26 percent on X-ray film and 50 percent on apples.   

When there are not outright tariffs, there are other non-tariff barriers that limit trade and investment including:

  • Mandatory technology transfer requirements  for telecom equipment;
  • 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 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.

Ultimately, what America seeks is a level playing field for its companies, where the cost and quality of their products determines whether or not they win business.

In seeking that level playing field, we are merely asking for the same treatment foreign companies and investors receive in America.

The United States is now, and has historically been, one of the world’s most open economies.  We are the number one destination for foreign direct investment in the entire world.

Companies and innovators know that when they come to the United States, they will have largely unfettered access to our markets.  And they know that their ideas and their inventions will be protected.

That’s why of the 167,000 patents granted by our U.S. Patent and Trademark Office in 2009, over 50 percent of the applications originated in a foreign country. 

The simple fact is that the United States would not be the innovative, dynamic country we are today without being so open to the ideas, the innovations, and, indeed, the capital of foreigners.

It was Dutch investors who helped provide much of the money to build our railroads in the 1800s.

It was a German fur trader who became America’s first multimillionaire.

It was a Scotsman who built the great steel company that powered America's industrialization in the 1900s.

And that legacy continues to this day.

Foreign-owned companies employ American workers in every single one of America’s 50 states.

More than five million Americans are directly employed by foreign companies in the United States, ranging from Japanese carmakers to British banks to Indian energy and industrial companies. 

Meanwhile, America continues to be a place where aspiring entrepreneurs come from the world over to chase their dreams.

In fact, Indian-Americans are the top entrepreneurs among all immigrant groups in the United States.

These Indian entrepreneurs are responsible for hundreds of thousands American jobs.  And we are happy to have them, not just because of the economic value they create but because they have so enriched the life and culture of the United States.

India’s influence can be felt all across the U.S. – from film and cuisine to clothing and music.  Three million Indian-Americans make important contributions to nearly every aspect of U.S. life everyday. 

They are our neighbors.  They are our friends.  And they simply make America a better, more dynamic place.

Now, I know that foreign people, foreign companies and foreign money coming into the United States hasn’t always been welcome. 

At certain times in our history, some said that foreigners were diluting our culture…that foreign companies would hurt U.S. industries…or that foreign investors would try to control America’s destiny. 

We hear similar fears from some quarters in India today.  But I think the historical experience of the United States, and the recent experience of India proves that those fears are unfounded.

For some 200 years, the United States’ competitive advantage has 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.

Thank you.