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3 Indo-US Economic Summit
ACCELERATING GROWTH
September 13 & 14, 2006
Hotel Le Meridien, New Delhi
Speechs
Opening
Remarks by Mr B Prabhakar, President, Indo-American Chamber of Commerce
Hon'ble Minister for Defence, Mr. Pranab Mukherjee
H E Ambassador Mulford, US Ambassador to India
Dr Pratap C Reddy, Chairman, Apollo Hospitals Group & Member, Indo-US
CEO's Forum
Mr. Deepak Pahwa, Executive Vice President & Chairman of the Summit
Mr. K N Memani, Member, Executive Council, IACC
Mr Prem Behl, Summit, Co-chairman & Past Regional President, IACC
Mr Baljit Sobti, Regional President, IACC Mr Chopra, Secretary General,
IACC and
Members of the Diplomatic Corp
Ladies & Gentlemen
It is my great honour to extend a warm welcome
to our distinguished guests, speakers, representatives of the Indian
and US Governments, members of the Diplomatic Corps, corporate leaders
and participants.
We are indeed grateful to Hon'ble Defence Minister
for making special efforts to address us by flying all the way from
the interiors of West Bengal, where bye-elections have been announced.
Our Defence Minister, Mr Pranab Mukherjee needs
no introduction. He is one of the most respectable statesmen in
the country and has had a long and successful carrier in public
life. Mr. Mukherhee has held diverse portfolios in the Government,
spanning a carrier of over 35 years. Besides heading the crucial
Defence portfolio, Mr. Mukherjee serves on a number of important
Committees.
A warm welcome to H E Dr David Mulford. Dr Mulford
came to India as US Ambassador to India in 2004. Before being nominated
as the U.S. Ambassador to India, Dr. Mulford served as Chairman
International of Credit Suisse First Boston, based in London. From
1992 to 2003, Dr. Mulford was responsible for leading Credit Suisse
First Boston's worldwide, large-scale privatization business and
other corporate and government advisory assignments. Dr Mulford
has shown deep commitment in developing and deepening economic and
commercial ties between India and the US.
I am happy that we have one of the members of the
Indian CEO Forum amidst us - Dr Prathap Reddy. The Indo-US CEO Forum
has been setup to advise both the Governments on ways to increase
trade and investment flows.
Dr. Prathap Reddy is the founder-chairman of the
Apollo Hospitals Group. He is a visionary who shaped India's healthcare
industry. He is the recipient of multiple awards, honours, felicitations
and fellowships. Amongst a host of awards, the most valued are the
Padma Bhushan, awarded to him in 1991 by the Government of India.
The Indian economy is amongst the fastest growing
economies in the world. India's economy has achieved spectacular
growth since 1991 after nearly four decades of restrictive economic
policies. Economic liberalization has breathed a new life into most
sectors of the Indian economy. We are proud that today India occupies
a place amongst global leaders.
What makes our development story different is the
fact that our reforms are embedded in a strong democratic policy,
are equitable and inclusive. Apart from China, no other major economy
in the world has achieved such impressive rates of growth in recent
years.
Our growth story cannot be complete without foreign
investment. Our government welcomes FDI as it accelerates the investment
rate, brings in technology, gives greater market access and speeds
up globalization. While our FDI policy is an evolving policy, I
would urge the Indian Government to usher in the second generation
of reforms, particularly in areas such as retail, insurance and
banking. Entry & exit norms for industry should be eased and rules
and procedures should be rationalized.
It is against this background of strong economic
growth and India - US synergy in the Bush-Singh era, that the 3rd
Indo-US Economic Summit is being held. Our relationship is built
on common values, most of all democracy. This relationship has to
be backed by a strong economic relationship. The Indo-American Chamber
of Commerce will strive to meet this goal.
The level of bilateral trade at around $ 27 billion
is low. Both the Governments have committed to double trade in 3
years.
On the FDI front, although US Is India's largest
foreign investor, US investment in China is 25 times more than in
India. In real terms, trade and investment between the two countries
is nowhere near its true potential. The cordial relationship between
the two countries should reflect in closer trade and economic ties.
US companies should take advantage of India being an investor friendly
country and show greater engagement with India in infrastructure,
IT, pharmaceutical, automobiles, manufacturing, defence research,
development and production.
The challenge is to step up economic cooperation
by effecting quantum increases for which necessary conditions will
have to be created on either side.
Indian investments abroad have been showing an
encouraging trend. Between April 1995 and March 2005, maximum outward
FDI by Indian companies have been to the US. Indian firms invested
over $2 billion during this period in the form of equity and loans
in companies set up there. With Indian manufacturing companies beginning
to expand abroad, the next 3-5 years will see a considerable rise
in our investments in the US.
Friends, it is a pity that the WTO talks in Geneva
in July collapsed. India is in favour of salvaging the suspended
Doha development round and is committed to a rule based multilateral
trading system. The developed countries should take the lead in
correcting distortions and improving market access for developing
nations especially in agriculture. The Doha round can move only
if trade distorting subsides paid to farmers by rich countries are
removed.
Thank you,
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Following
is the full text of the speech delivered by Defence Minister Shri
Pranab Mukherjee at the inauguration of 3rd Indo-US Economic Summit
on Wednesday, September 13, 2006 in New Delhi.
"I am delighted to be here to address this august
gathering of Indian and American Corporates, policy makers and thinkers.
I congratulate the Indo-American Chamber of Commerce for this initiative
that brings the businessmen of the two countries face to face and
facilitates trade between the two countries. The Chamber is unique
in having not just large enterprises but also small and medium businesses
amongst its members. The small and medium businesses, after all,
are the backbone of any economy. The summit provides an important
forum for not just businessmen of all hues to talk to each other,
but also to get their views and perspectives across to government.
Many of you have literally travelled half-way across the globe to
attend this summit. I urge you to make good every opportunity to
catalyse joint ventures and partnerships. That we take this summit
seriously is evident from the presence of so many of our premier
economic thinkers, financial experts and policy makers amongst the
audience. The theme for this year is "Accelerating Growth". That,
I think, amply reflects the current state of Indo-US economic relations.
According to available statistics, US exports to India registered
a growth of 23.3 % during January-May 2006. India's exports to the
United Sates in the same period registered a growth of 19 %. In
just the first five months of this year, Indo-US bilateral trade
amounted to approximately US $ 12 billion. It is well set to overtake
last year's figure of $26.8 billion, which itself was up from $21.6
billion in 2004. Our aim is to double bilateral trade to $60 billion
within the next three years. It is an ambitious target. But not
a difficult task, given the range of opportunities that abound in
India, the new areas opening up for investment literally by the
day, and reduced government restrictions on Foreign Direct Investment.
As far as the conditions for doing business are concerned, a recent
article from Wharton Business School concluded that India is a better
place for business compared to China in the long run because of
the solid underpinnings for economic growth, including "a democratic
government, a strong education system, widespread knowledge of English
and a deep pool of expatriates experienced in Western businesses."
To that, I would add a vibrant press which keeps the government
on its toes. There could be minor hitches in the process of reforms,
but as you know only too well, democracy is about checks and balances.
Decisions can be taken only after debate and due consideration.
Hasty decision making can have its own negative repercussions.
The good news is that mechanisms are in place to
identify bottlenecks and removing them. Since the year 2000, when
the Indo-US Economic Dialogue was established, a number of commissions
and fora have come into existence with the goal of putting business
relations onto a higher trajectory. Revitalising economic relations
is a priority issue for both the countries as reflected in the Joint
Statement signed between our Prime Minister and the US President
in July 2005. The objective of setting up a Indo-US CEO Forum, as
envisioned in the Joint Statement, was to bring private sector input
to government-to-government deliberations. The Forum submitted its
report in March of this year during the visit of President Bush.
Another important initiative announced by our two governments last
year was the establishment of a Trade Policy Forum. The Forum facilitates
dialogue in the areas of tariff and non-tariff barriers on industrial
products, agriculture, intellectual property rights protection,
investment and services. In the year since its inception, three
ministerial level meetings and one secretarial level meeting have
been held. In the last one, held in Washington in June 2006, it
was decided to create a senior-level private sector advisory group
to allow for greater interaction between government and private
sector trade experts, including from corporations, associations,
think tanks and other organizations. The Trade Policy Forum has
proved to be a useful mechanism for removing irritants coming in
the way of trade. No doubt, it will become even more effective,
with the creation of the advisory group. If trade figures are any
indication, you are already reaping the fruits of these initiatives,
with sales of American scientific equipment, coal, silver jewelry,
fibre-optic cable, almonds, and power generation equipment sharing
a growth of more than 30 percent in 2005. Another sector where there
is ample scope for joint ventures is in defence research and production.
The Joint statement of July 18, last year, provides for the United
States and India to work towards concluding "defense transactions,
not solely as ends in themselves, but as a means to strengthen our
countries' security, reinforce our strategic partnership, achieve
greater interaction between our armed forces, and build greater
understanding between our defense establishments." And just before
the July 18 agreement was reached, I had signed an important defence
cooperation agreement with the US government on the above lines.
The defence ministry has taken a number of initiatives to energise
defence co-production, including opening up of defense production
to the Indian private sector with the option of foreign direct investment
upto 26 per cent in these companies. There has sometimes been criticism
that our defence procurement procedures are time-consuming and opaque.
I initiated a policy reforms process two years ago.
Defence Procurement Procedure - 2006 is now a comprehensive
document with clearly stated norms and guidelines on 'Buy', 'Buy
and Make' and 'Make' procedures. It also includes shipbuilding procedure
and Fast Track Procedure for acquisitions. The Offset Policy which
was introduced in 2005, is now firmly in position. The long pending
request of the Indian industry for a level playing field has also
been addressed and necessary orders providing a level playing field
have been issued and are now a part of these two documents. With
these measures, we have effectively opened the doors for the Indian
industry to participate in defence research, development and production.
The acquisition of defence equipment is a complex and intricate
process. This is necessarily so as defence equipment is expensive
involving commitment of substantial public funds. Defence acquisitions,
owing to its special features and characteristics, involve a long
and deliberate process. This process is to ensure that the country
gets best value for money. To achieve this objective, it is essential
that proper procedures for acquisition are laid down and adhered
to. These procedures provide the guidelines and norms that would
govern the selection of an equipment and its subsequent acquisition.
They provide the template against which all steps taken in the acquisition
process can be examined for their correctness. Strict adherence
to laid down procedures, therefore, ensures the highest degree of
probity and public accountability. It creates the conditions required
for transparency, free competition and impartiality. Now all major
decisions would be taken simultaneously in a collegiate manner by
the Defence Acquisition Council. The generic requirements of the
three Services would be placed on the website of the Ministry of
Defence to enable vendors to register themselves on the internet.
There would be increased transparency in the conduct of field trials.
It will be mandatory to sign a pre-contract integrity pact in all
contracts over Rs. 100 crores. In 2005, the government came out
with a new offset policy which requires that 30 percent of the value
of foreign defence contracts over Rs. 300 crores would need to be
offset by purchases, investments and transfer of technology to India,
to run concurrently with the main contract. That policy has been
further amplified in the current set of procedures - a potential
vendor now has many more options for fulfilling his offset obligations.
He can either carry out direct purchase of goods or execute export
orders for defence products, components and services provided by
Indian defence industries. Alternatively, offset requirements could
also be satisfied through direct foreign investment in Indian defence
industries, and even by direct foreign investment in Indian organizations
engaged in defence research and development. Roadmap for indirect
offsets is also under our consideration. A Defence Offset Facilitation
Agency has been set up, as a single window agency, to facilitate
the implementation of the policy. One of the briefs of this Agency
will be to assist potential foreign vendors in interfacing with
their counterparts in the Indian defence industry for the purpose
of identifying potential offset products and projects. With these
new and transparent policies in place, my hope is that you will
find the defence sector an attractive arena to collaborate and invest
in. It is true that the implementation of new policies brings up
many problems, and the defence sector has problems that are unique
to it, given its size and structure. You have my assurance that
timely corrective measures will be taken to smoothen the roll out
of the new policy framework. I will welcome suggestions from the
industry in this process. Pre-existing barriers and mindsets that
came in the way of economic co-operation are in the process of being
removed on both sides. The passage of the Bill on co-operation in
the field of civilian nuclear energy by the US Congress would, I
believe, benefit the business communities on both sides. Firstly,
India is largely dependent on imported oil and gas to meet its energy
needs. Our energy consumption levels are going to increase very
significantly if we are to maintain a high rate of economic growth
of 8-10 per cent. Conversely, our growth levels could flag if we
don't have access to more than one source of energy. If that were
to happen, that could have tremendous side-effects since India is
poised to be one of the engines of the world economy in the years
ahead. Secondly, there is a large body of restrictions on the US
side related to the nuclear issue that forms an invisible barrier
to trade and investment on the part of both Indian and American
businesses. Particularly so in the areas of high-technology trade
and co-operation, so vital to the advancement of the economies of
our two countries in the 21st century. The benefits of co-operation,
not just in trade, but on the other important issues of our times,
are brought home to us day after day, and the governments of the
two countries owe it to our two peoples to remove those barriers
that come in the way of a better quality of life. Once the US Congress
passes the Bill, in the form reflecting the understanding between
the two governments, it is my belief and hope that Indo-US economic
co-operation will finally come into its own. Current bilateral trade
between our two countries is one tenth of the trade between the
United States and China. There is no reason why levels of trade
between our two countries shouldn't rise to, and even surpass, those
levels. It is my hope that the 3rd Indo-US economic summit will
provide a useful forum bringing about awareness of the opportunities
for trade between the two countries.
I wish the summit all success. Thank you."
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