Bilateral Relations Since the Obama-Singh Summit
Assistant Secretary, Bureau of South and Central Asian Affairs
Thank you so much for inviting me to speak at this panel. I’m honored to be invited here to give remarks on the state of U.S.-India relations, and to sit on this panel with my good friend, Ambassador Meera Shankar. I also want to thank the U.S. Senate’s India Caucus and Rick Inderfurth, the CSIS Wadhwani Chair in U.S.-India Policy Studies, for co-hosting this wonderful event. And special thanks to Senator Warner and Senator Cornyn for your hard work as caucus co-chairs. We in the State Department deeply appreciate your leadership and support in helping to guide a relationship President Obama has called “one of the defining and indispensable partnerships of the 21st century.” It is a mark of the bipartisan support our relations with India enjoy that both the Senate and House caucuses are among the largest bipartisan caucuses in Congress. That bipartisanship has helped drive significant and uninterrupted progress over the last decade across administrations.
The Arc of U.S.-India Relations
Nearly 20 months ago, President Obama and Indian Prime Minister Singh met here in Washington to open a new chapter in relations between our two great nations -- the world's oldest and largest democracies. The two leaders emphasized our countries’ shared values -- pluralism, tolerance, openness, and respect for fundamental freedoms and human rights -- and noted how these values are increasingly important for securing global security and sustainability. In their joint statement, Obama and Singh resolved “to harness these shared strengths and to expand the U.S.-India global partnership for the benefit of their countries, for peace, stability and prosperity in Asia, and for the betterment of the world.”
President Obama's trip to India last November produced another watershed moment in our rich ties, and demonstrated that our partnership holds benefits for both of our countries, as well as the world. Our two nations are now cooperating on nearly every important challenge of our times -- from counter-terrorism to nonproliferation, from economic growth to reconstruction in Afghanistan, from food security to energy security.
Now we look to build on that progress with Secretary Clinton's upcoming trip to India in July for our second Strategic Dialogue. The Secretary and her counterpart Indian Foreign External Affairs Minister Krishna launched the Dialogue in 2009 to provide a framework and strategic direction for the huge range of bilateral government to government activity we now have underway. I won’t go into all 21 dialogues and working groups that our two Ministers oversee – that would last until tomorrow – but I do want to highlight some of the accomplishments over the last year and preview a few of our possible achievements in the next couple years.
The robust health of our broad commercial relationship provides an example of how our strong and growing people-to-people ties complement, and in fact are often well out in front of, our government efforts. Trade between the U.S. and India has doubled twice in the past ten years and continues to grow and drive our partnership. In 2010, two-way trade was up almost 30 percent from the year before and India is now our 12th largest trading partner, up from 25th in 2000.
Indian foreign direct investment from India to the U.S. was $5.5 billion at the end of 2009, growing at approximately 35 percent between 2005 and 2009 and making India the seventh fastest growing source of FDI in the United States. India and the U.S. have the potential to be each other’s largest trade and investment partners, with significant benefits for both economies and peoples. We have already made significant strides toward that long-term goal. Yet economic barriers make it hard for U.S. exporters to gain access to some Indian markets, especially in agricultural goods. Restrictions in retail, insurance, defense and other key areas continue to limit American firms’ expansions, and U.S. and Indian firms’ partnerships in India.
So we must encourage market openings that will allow both countries to capitalize on this continued growth and thrive. As one priority, we want to re-energize discussions on a Bilateral Investment Treaty, known as a BIT. A BIT with India would help lower the risk of investing in India by establishing safeguards and an independent arbitration process that would provide our investors maximum protection. A BIT would also protect growing Indian investment in the United States.
Another aspect of trade includes defense deals. India has embarked upon a military modernization program and is expected to spend more than $35 billion over the next five years on defense acquisitions. Although we regret that India chose not to down-select a U.S. fighter for its medium multi-range combat aircraft, India continues to look to U.S. suppliers to facilitate its defense modernization.
U.S. firms have already won almost $8 billion in defense sales in the past four years, including the purchase by the Indian Air Force of 10 Boeing C-17 airlifters; transfer of the former USS Trenton to the Indian Navy; the Indian Air Force’s purchase of six C-130J aircraft, the first of which arrived on time and under budget in February; and the purchase of eight P-8I long-range maritime patrol aircraft. Our defense cooperation complements the ongoing slate of complex joint exercises that continues to habituate American and Indian militaries to work together.
U.S. visa issuances to Indians are another good indicator of our thriving relations. For the past four years, Indians have received about half of all H1-B visas issued worldwide, and more than 44 percent of all L-1 intra-company transfer visas. 650,000 Indians traveled to the United States in 2010 – an 18 percent increase over 2009. And of course, India has historically been one of the largest sources of international students in our colleges and universities with over 100,000 students coming here to study last year.
Mirroring the Indian enthusiasm for the United States, we would like more Americans to go to India for tourism, business trips and exchanges. I particularly hope we can exceed the 2,700 Americans who studied in India last year. The U.S.-India Higher Education Summit planned for this fall in Washington, DC will bring hundreds of educational institutes together from both our countries. The summit will foster American students’ participation in India’s educational system, while growing the number of Indians studying in the United States.
Educational linkages will bolster the efforts we have made to forge innovative joint activities. For example, the National Oceanic and Atmospheric Administration just established a “monsoon desk” to help bring monsoon forecasting data to India’s farmers in cooperation with the Indian Space Research Organization. We have also established a new public-private partnership, the Science and Technology Endowment Fund, which will award 2 -2.5 million dollars per year to promising and innovative projects that could produce material benefits for both countries.
And under our Partnership to Advance Clean Energy, we have established a Joint Clean Energy Research and Development Center that will mobilize up to $100 million in public and private sector funds. This new energy research initiative is the most integrated joint clean energy undertaking we have done with any country, ever. And since the passage of the U.S.-India civil nuclear agreement, we stand poised to contribute to the growth of India’s civil nuclear energy, and we continue to urge the Indian government to put in place a good regulatory and legal framework.
Afghan trip, Indo-Pak relations, Africa
I also want to take a moment to recognize India’s regional and global leadership. Prime Minister Singh’s recent visit to Kabul underscored India’s strong initiative to support international efforts to rebuild a secure, stable Afghanistan. The Prime Minister raised India’s assistance pledge by $500 million to a total of $2 billion. India has assisted with critical infrastructure such as power stations and the Parliament building, and small development projects like health care facilities and water wells. We also greatly appreciated the Prime Minister’s public support for Afghan-led reconciliation efforts.
Prime Minister Singh likewise has also shown leadership and courage in advancing the current thaw in India-Pakistan relations. Following the “cricket diplomacy” launched by Prime Ministers from both sides, the Commerce Secretaries of the two countries met last month in Islamabad and announced ambitious commitments to enhance trade and commercial ties.
India’s economic rise presents a huge opportunity for Pakistan. A bilateral breakthrough could provide a catalyst for wider regional economic integration in the South and Central Asian region. But India’s efforts to make the world more safe and secure do not end at its regional borders. Prime Minister Singh undertook a momentous trip to Africa several weeks ago, where he pledged over $5 billion dollars in development deals, encouraged counterterrorism cooperation, and pledged to create an India-Africa Institute of Agriculture and Rural Development. The India model for encouraging growth in Africa is very impressive.
The Strategic Dialogue and beyond
Our ties are poised to expand even more in the coming months. We just held the inaugural Homeland Security Dialogue in New Delhi, with a U.S. delegation led by DHS Secretary Janet Napolitano. This landmark event showed our two countries’ deep commitment to countering the global and regional terrorist threats posed by Al Qaeda and its allies.
This month will see bilateral talks on arms control and international security in Vienna, visits to the U.S. by the Indian Finance and Commerce Ministers, and a possible visit from the head of India’s opposition BJP. The High Technology Cooperation Group plans to meet this summer to explore further cooperation to continue expanding high technology trade between our democracies.
We are also stepping up our cooperation with India in multilateral, regional forums, such as the ASEAN Regional Forum, to be held this year shortly after the Strategic Dialogue.
The U.S.-India Global Strategic Partnership: Imagine the Possibilities
The global strategic partnership between the United States and India is founded on shared values and exceptional people-to-people ties. But we must remember that this is a long-term project. Neither country can take the relationship for granted. We need to work together to ensure that the spirit of President Obama and Prime Minister Singh's November 2009 summit is carried forward through concrete steps.
Such achievements will build the political support in Washington and Delhi, as well as Mumbai and Manhattan, to think more ambitiously about what we can achieve, and where our partnership will go in the rest of the 21st century.
India is on track to have the largest population on the planet by 2030, and might have the largest economy by 2050. India is a rising giant whose influence is being felt not only in the Indian Ocean, but in the Americas, in Africa, the Middle East, and in Central Asia. Its rise – fueled by a young, optimistic, dynamic, educated population – will be one of the great stories of our time.
Our strategic relationship can make the world more secure and democratic, while our commercial partnerships can produce novel products that meet the needs of the 21st century consumer and create millions of new jobs in each of our countries. Our people, our businesses, our diverse, intertwined knowledge-based societies will support the next chapter of the U.S.-India partnership. Once again I want to thank the Members of the India Caucus for their staunch support of this growing partnership. Thank you very much for your time. I’d be honored to take your questions.