It has been a pleasure to host you, Minister Mukherjee, and your delegation here in Washington. Last year, when President Obama spoke before a joint session of the Indian Parliament, he said: “With India assuming its rightful place in the world, we have a historic opportunity to make the relationship between our two countries a defining partnership of the century ahead.”
The U.S.-India Economic and Financial Partnership reflects our determination to act on this opportunity and fulfill the commitment President Obama and Prime Minister Singh made to the development of the U.S.-India relationship. This relationship is strengthened by a shared vision of the world and a dedication to democratic government, free market economies, respect for pluralism.
During the President’s trip to India in November, he saw firsthand how this relationship is benefitting both Indians and Americans. He heard about how American manufactured solar cells are helping move Indian cell towers off diesel generators and how a drug discovery technology invented and manufactured in the U.S. is helping find new cures in India for deadly illnesses, including dengue.
Our economic relationship has shown real progress and has sustained growth in bilateral trade and investment. Yet when you consider the sheer size of our respective economies, it’s clear that our relationship presents both our countries with vast untapped potential for much greater trade, investment and economic opportunity.
Minister Mukherjee and I began the Partnership in Delhi in April of last year, and we made a commitment to strengthen our economic and financial ties. Since that time, our two governments have worked to follow through on that pledge, with extensive exchanges at the sub cabinet level and working group meetings on debt management, infrastructure and illicit finance.
First, we are working to advance policies that will expand trade and investment between our two nations. Increasing trade and investment is a powerful force for generating growth, for raising living standards and for creating jobs.
Our bilateral economic relationship benefitted significantly from those reforms. Between 2000 and 2010, Indian exports to the United States grew by nearly 180 percent, and American exports to India increased more than four times, supporting hundreds of thousands of jobs across our country. In addition, combined bilateral U.S.-India foreign direct investment grew by nearly 165 percent between 2005 and 2009. India, which was our 25th largest trading partner in 2000, is now our 12th largest trading partner.
American companies still face barriers in India in sectors such as banking, insurance, manufacturing, multi-brand retail and infrastructure. Easing those barriers, which are limiting economic growth and job creation in both our countries, would be an important step toward integrating our economies. We understand that addressing these barriers can be politically challenging, but the long-term benefits clearly outweigh the short-term challenges for both our countries.
Second, we hope to see more progress toward economic and financial reform in India. We know that the economic reforms and market opening that began in India in the early 1990s have had a significant impact on both economic growth in India and the global competitiveness of Indian companies.
The Indian government recognizes that to realize its aspirations of strong growth, it will need to attract sufficient investment, both from abroad and domestically. India will need to advance pending economic and financial reforms to make this possible.
By 2017, India plans to raise $1 trillion in infrastructure financing, half of that coming from the private sector. The government’s recently announced debt financing framework will help encourage private investment, as well as its plan to develop a more formal framework on public-private investments. Reducing government demand for credit will help increase the available credit for infrastructure, as will addressing obstacles to creating a robust corporate bond market. Potential ways to address bond market challenges include giving greater scope for institutional investors to invest in fixed income assets, raising aggregate and individual investment caps to boost liquidity, and developing a liquid government securities market.
We’ve heard encouraging things from Minister Mukherjee and his team over the last few days about their commitment to move forward with these significant reforms.
Third, we are working to continue to build a more strategic relationship to strengthen cooperation on a variety of global economic issues through the G-20 and other multilateral groups, like the Financial Stability Board. Our goal is to promote strong, balanced, and sustainable global growth. India has made its commitment to exchange rate flexibility and domestic demand-led growth clear in the G-20, where we have shared interests and have been cooperating on important issues.
In the G-20, we worked to give India and other countries more of a voice on global economic decision making. Similarly, we’ve also helped to modernize the governance structures and the balance of voting rights at the international financial institutions, like the IMF and World Bank, and the international standard setting bodies, including the FSB. These reforms have helped these institutions better reflect the global economy and now give India a greater role.
In the United States, we aren’t just watching India’s rise as an economic power, we support it. We encourage it. And we want to help advance it. India’s growth is good for us, just as our growth is good for India. I mentioned earlier that India is now our 12th largest trading partner; the President’s goal is to have India become one of our top 10.
I want to thank everyone involved in these meetings and in particular Minister Mukherjee for his leadership, his confidence and his commitment to making this a productive relationship for this generation and the next.