Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
American Chamber of Commerce of India
New Delhi, India

The U.S. and India: Opportunities and Challenges for Growing Together

Thank you for hosting this luncheon. Though I've been to India before, it is a privilege to be here for the first time as Secretary of Commerce. The U.S. places a tremendous priority on our relationship with India.

While the President's visit last March was a visible example of that priority, the ongoing shared values, commitment to democracy and enhanced engagement on all levels signifies the great importance of our partnership.

Under Secretary for International Trade, Frank Lavin, who is here with me today, recently conducted the U.S. government's largest business development mission ever?the mission came here to India.

We appreciate FICCI's work with us on the Mumbai Business Summit and the Commercial Dialogue events that were part of the overall mission.

My visit this week serves to reinforce our commercial interest in India, but also to discuss the challenges our two nations face in growing our relationship and expanding upon our economic successes.

This economy has made impressive strides in recent decades--growth alone in India's economy in 2005 is the equivalent of the entire Indian economy of 35 years ago.

The U.S. is India's largest trading partner, and through November that partnership was worth $29 billion in two-way trade. This evening we will announce final U.S. trade totals for 2006.

I'm confident the numbers will reflect we are well on our way to reaching the goal set by President Bush and Prime Minister Singh of doubling trade by 2009.

Commercial and Strategic Partnerships
The Commerce Department is working to enhance our commercial and strategic partnerships. There are numerous opportunities for engagement, from oceans research to patents and trademarks, which will create growth, efficiency and employment for both of our economies.

One specific area of success has been the U.S.-India High Technology Cooperation Group, a key dialogue that has helped advance high-tech trade and collaboration.

The H.T.C.G. is a unique partnership between government and industry, which has delivered significant results. Today, less than one percent of U.S. high-technology exports to India require an export license.

Next week's meeting of the H.T.C.G. is an opportunity to capitalize on the momentum of the emerging U.S.-India Strategic Partnership. Deputy Secretary Sampson looks forward to hosting Foreign Secretary Menon and his delegation in Washington, D.C.

Our nuclear agreement is another example. U.S. civil nuclear companies are eager to partner with Indian companies. Once all necessary steps toward civil nuclear cooperation are taken, there will be abundant opportunities for Indian and U.S. businesses together to develop the Indian nuclear power sector and partner in other markets.

Clean energy is another area in which we can partner for commercial and environmental success. In April, the Commerce Department will lead a Clean-Energy Technologies Trade Mission to India.

As you know, India is a member of the Asia Pacific Partnership on Clean Development and Climate. The APP was initiated by President Bush, Prime Minister Singh, and the leaders of Australia, China, Japan and South Korea.

In the next decade, India plans to add 100 gigawatts of new power, including bringing electricity to 18,000 remote villages.

U.S. companies produce world-class environmental technologies that can help India meet the needs of its rapidly growing economy while reducing air pollution and enhancing energy security. So we are excited about this unique trade mission.

Challenges to Continued Growth
As I mentioned, India has experienced impressive economic growth. The Indian GDP in 2005 was $785 billion. The economy has grown at a stunning 9 percent, and unemployment has been trending downward.

U.S. exports to India are up 25 percent, and investment is up significantly. This has been possible because India has made important reforms which have encouraged U.S. businesses to keep coming.

We applaud efforts to allow more foreign investment, reduce tariffs, protect intellectual property and liberalize air travel. In fact, the flight I took into Delhi was allowed through the Open Skies Agreement, which has now been in place for two years.

This is a concrete example of a reform which has had an immediate impact on improving our ability to connect.

But more needs to be done to open India 's markets. There are some sectors such as retail, banking, financial services and telecommunications, where obstacles remain.

Needless bureaucratic hurdles, protectionist policies or caps on foreign ownership, hamstring businesses that wish to contribute to this burgeoning market, and bring goods, services and increased options to Indian consumers.

While progress has been made on intellectual property, India continues to be a major global source of counterfeit medicines. Enforcement is key. Without protecting patents and data India will not attract the R&D and innovation necessary for strong growth in sectors such as pharmaceuticals.

Nearly three-quarters of all U.S. software in India is pirated. India is renowned for its world-class skills in software development, exporting three times as much IT as it consumes. India could support a strong local software industry if piracy were lower.

The Indian entertainment industry will also benefit from stronger IPR enforcement. Bollywood is endlessly creative and innovative. The Indian artists and performers who invest in creative pursuits deserve to benefit from their hard work.

The challenging regulatory climate here continues to hamper commercial opportunities. While there are many success stories, there are also many stories of failed partnerships and business ventures.

In fact, earlier this month, an article in The Wall Street Journal chronicled some of these challenges. India must continue making the difficult choices that will ultimately expand and grow opportunity for its citizens.

For India to continue its phenomenal growth it must open all areas of its economy and encourage investment--both foreign and internal.

India attracts less foreign investment than other countries in the region. Similarly, India's inward FDI is significantly lower than its neighbors in Southeast Asia. There is tremendous room for growth.

Opportunities for Continued Success
But India is not alone in its challenges. In the U.S. we too are working to keep opening international markets, and ensure access to our markets and choices for our consumers.

In a growing international marketplace, it is easy for some to suggest protectionism would protect jobs. It won't. The only way to create and protect jobs is to promote private investment and trade, encourage innovation, expand job training, and compete.

One way to promote innovation is to expand the minds of young scientists and engineers through enhanced educational opportunities.

In today's interconnected society it is crucial that we work together to understand each other and build a better world. Education offers one of the best avenues toward better understanding, and breakthroughs in science and technology that helps to drive business around the world.

India is a crucial partner for the U.S. American universities that have been educating Indians for years. In fact, there are more Indian students in our country than from any other.

America's doors continue to welcome students from India. We welcomed 80,000 Indian students last year.

The Department of Commerce is leading an initiative with the Department of State and with the support of the U.S. education community to inform students here about the breadth of educational opportunities in the U.S. through the eyes of current Indian students.

In addition to education, opening markets throughout the world also helps us compete and create jobs. Businesses in India and the U.S. have responded with tremendous enthusiasm to the new opportunities increased foreign markets provide. In the U.S., we have created an export culture throughout our country.

One final area we are working on, which will expand international markets, help alleviate poverty and boost development around the globe, is the advancement of the Doha round of trade negotiations. Simply stated: India's leadership is required to achieve an agreement.

India has a tremendous opportunity to play an active and positive role in pushing these talks forward. We are willing to make difficult choices, but we have a shared responsibility to make the round a success.

In the U.S. we hope to continue on the track of opening more markets, and are working with the new Congress to renew President Bush's Trade Promotion Authority, which is currently set to expire at the end of June.

Time is short, and a great deal remains to be done if we in the United States are to show progress in the Doha Round sufficient for Congress to renew the Trade Promotion Authority needed to conclude the negotiations.

Conclusion
Because of our strong relationship and respect for each other, we have a great future. India has experienced an amazing amount of growth and reform in a very short time.

To keep pace, I hope you continue to fight back the temptation to put on the brakes and put up walls--continued economic success will only result from transparency and openness--not protectionism and isolationism.

We are proud to be India's partner. Together we will work to expand and enhance the international market, and we will work to ensure that the U.S.-Indian relationship enhances prosperity and improves the lives of our citizens.