"Taking the U.S.-India Partnership to the Next Level"

Address by
THOMAS J. DONOHUE
President and CEO, U.S. Chamber of Commerce

Confederation of Indian Industry
New Delhi, India
April 13, 2010

As Prepared for Delivery

Thank you very much and good afternoon ladies and gentlemen.

I'd like to thank the Confederation of Indian Industry—not only for providing me with this opportunity today—but for all you do every day to foster close and profitable ties between the businesses of our countries.

All of us at the Chamber—and especially Ron Somers and the U.S.-India Business Council—have worked with CII very closely for many years, and we greatly value your friendship and advice.

Let me add that it's a particular honor to be sharing the platform with Minister Patel.

Sir, we will never forget your vision and leadership in achieving India's first Open Skies agreement. And how pleased we are that it is with the United States. Now we look forward to working closely with you on your bold plans to expand India's entire aviation network.

Aviation is only one of many areas where collaboration between our businesses and governments can grow to the benefit of both India and the United States. But it won't happen automatically. The business leaders in this room and throughout our countries have to make it happen. And that's my key message today.

In a speech like this, it's always tempting to spend a lot of time talking on about how special and important the U.S.-India relationship is. But we already know that—and indeed it is .

It would also be easy to spend a lot of time talking about our recent successes because there have been so many. But in today's very competitive global economy, the smartest way to celebrate past success is act quickly to build on it.

How we do that is what I'd like to address in my remarks today. It's time to start writing the next chapter in the positive U.S.-India commercial relationship, with the private sectors of both countries leading the way.
In my view, there has never been a better time or opportunity to lift U.S.-India trade and investment relations to a whole new level.

Think about it. The United States is just starting to emerge from a severe recession in which over 8 million Americans have lost their jobs.

India must accelerate its growth in order to provide jobs for the millions of young people who enter its workforce each year.

More trade and investment between us means more jobs and prosperity for both of us.

So I am visiting New Delhi and Mumbai this week with some simple messages for our friends in business and in government.

Let's collaborate on innovation. Let's partner on infrastructure. Let's jointly develop clean, plentiful, and diverse supplies of energy.

Let's bring efficiencies and productivity to each other's economies—for example, through India's innovative value-adding IT industry and America's strength in retailing, logistics, and education.

Let's bring our most talented people together to invent and apply technologies that can address the food, water, health, environmental, and security needs of our people.

I can assure you that the enthusiasm of the American private sector in India has reached an all-time high.

In fact, the moment I told our major members I was coming here, my office was deluged with calls, questions, information, and requests.

There's no lack of desire on the part of American companies from many sectors and all sizes to do business in India. But the important question is, what will it take to move our partnership to the next level?

For starters, we need governments in both countries to catch up to the private sector and put the right policy environment in place. It means acting like partners and collaborators instead of greeting every common sense, mutually-beneficial reform with protracted delays and negotiations.

With the right policies, our companies will create a surge of new joint ventures, increase investment flows in both directions, expand our trade, create millions of new jobs, and yes, generate new tax revenues that can help address serious deficits in both Washington and New Delhi.

What are some of the issues that business and governments in both countries need to address? Let me mention just a few.

The Free Flow of Capital, People, Products, and Ideas

First, we should make the free flow of capital, people, ideas, and products between India and the United States a model for the rest of the world.

The rule for attracting capital is pretty simple—it goes where it is welcome, safe, and has a good chance to provide a decent return.

And attract it we must. The global competition for capital is fierce and getting fiercer.

I am deeply concerned that America's capital markets are losing their competitive edge. I am not convinced that our government and regulators are proposing the right solutions to strengthen our markets in the wake of the global financial collapse. In fact, much of what is being proposed by our Congress will make things worse.

Four years ago, well before the financial crisis, the Chamber organized a bipartisan commission to recommend ways to modernize our capital market regulations.

We then established a Center for Capital Markets Competitiveness with a staff of the best experts to work on getting the reforms implemented. Now we are fiercely lobbying the Congress for common sense reforms and against excessive regulations that would choke off the supply of money to our large and small businesses alike.

We are also very concerned that the United States is piling up unsustainable debt and will likely increase taxes substantially in coming years. We are pressing the government to control spending, avoid punitive taxes, and help business expand exports—policies that will help put our fiscal house in order.

All of us in business must also be concerned about rising levels of protectionism, in the United States and around the world. Our elected officials have passed "Buy American" provisions that repel investment and anger even our closest trading partners.

Congress has let three excellent trade agreements with Korea, Colombia, and Panama languish.

We have fallen short in the effort to modernize our immigration and visa policies, and some legislators are proposing even more restrictions on visas.

The Chamber and the U.S.-India Business Council are fighting these wrongheaded ideas. We are fighting for sound economic policies and open markets in the United States. And, we are working to insure that Indian goods, capital, people, and ideas are always welcomed.

Now, there are also a number of steps India should consider in order to attract more investment and reject protectionism.

Reduce tariffs and taxes on goods ranging from medical technology to internet service to transportation equipment to aviation technology.

Adopt a modern Postal Law that attracts more investment from our world class express delivery and logistics companies.

Modernize regulations in mining and other realms of energy and power development—all of which can be done while protecting the public and improving the environment.

Lift caps on foreign direct investment in defense, insurance, and other key sectors.

Likewise, removing the 10% Voting Rights Cap for investment in Indian banks is what we call a "no brainer." Lifting this cap will automatically attract more capital to India, and fast!

India has made strides in better protecting intellectual property, but more needs to be done.

And together, let's complete what we've already started—let's consummate a Bilateral Investment Treaty.

Let's stand together in reviving positive momentum in the Doha Round.

In recent years, India and the United States have each been blamed for the stalled Doha negotiations. The way I see it, this reputation, fair or not, puts us in an influential position to get things moving again. With the global economy now emerging from recession, it's time to formulate a joint strategy.

I believe we have a shared responsibility to do that.

Technology, Supply Chain Management, and Infrastructure

There is another major basket of issues that requires greater cooperation—in technology, supply chain management, energy, and infrastructure.

Our technology partnership is already strong. We are selling India our most sophisticated military technology—and it's no secret that we want to sell more.

We have signed an end-use verification agreement at long last.

We now need to make sure our ships and planes can communicate with each other, which is critical to dealing with natural disasters and terrorism.

Technology is the key to solving many of society's biggest challenges. India and the United States already have a long history of collaboration in this arena. Americans companies were among the first to bring technology solutions to India. GE, for example, has been in India for 105 years. Abbott is celebrating a century of service in India, bringing its life-saving drugs and medical devices to the sick and injured.

More than ever we need to collaborate as partners in this field. That's why it is incumbent on the United States government to streamline export control rules dating from the Cold War that inhibit technology transfers.

Improving India's supply chain management, especially from farm-to-market, would yield huge benefits for the Indian people and help the nation reach its goal of "inclusive growth."

Americans have this know-how. We've already seen it happen time after time—McDonalds has helped revolutionize India's lettuce and chicken industries. Heinz Ketchup has helped organize India's tomato industry. Frito Lay has vastly improved potato production.

Opening India's retail sector will have a similar effect. This will create efficiencies all the way back to the family farm, benefitting rural India through greater productivity.

We recognize that this change must be done sensitively so as not to displace the Mom & Pop shops that line all of India's thoroughfares.

Energy and infrastructure are also keys to our future.

American and Indian scientists will help lead the world in clean energy and we are excited by that. But in the meantime, both countries have huge and growing needs for energy.

India must quadruple its power generation capacity to maintain current growth rates. America will need at least a third more energy in the next 20 years.

We have viable, clean alternatives available already. We don't need to invent nuclear energy in the United States. We already have it and need more of it. So does India. So let's get busy making the most out of our civilian nuclear agreement.

This was an historic achievement. The Chamber and the US-India Business Council pulled out all the stops back home. Last week, our nations followed up by concluding an important deal on the reprocessing of fuel, the third-ever in U.S. history.

But now we need to tackle the liability issue. Legislation is badly needed here that is fair, reasonable, and which lives up to past commitments. This is not only important to foreign investors, it is critical to any Indian company that hopes to be part of a major expansion of clean, safe nuclear energy.

Education

Finally, let me say a word about the lynchpin of success for both of our countries—education.

Very simply, those nations that best cultivate their human talent will be the ones that lead in the 21st century.

In the United States, we still have the best universities in the world, but our K-12 schools are in need of substantial reform. Thirty percent of our young people don't even graduate from high school. In a wealthy, developed country like the United States, that's just inexcusable.

The business community is working hard in partnership with government to overhaul our public schools.

India is also facing daunting challenges in both scale and quality. Seventy percent of the population here is under 35.You have 400 million students in K-12.

I commend the Indian government for recently making education compulsory for 6-14 year-olds. But that will mean little unless the education is a quality one.

In higher education, India has 1,500 colleges and universities for a population of 1.2 billion people.

Today India sends more students to American universities than any other country, and we are glad to have them.

We are anxious to help educate more students here if India were to open its education sector to more investment. I know many universities and vocational colleges would be excited to open satellite campuses in India.

Ladies and gentlemen, I'm told there's an old Indian proverb that says, "Don't let grass grow on the path of friendship."

The business leadership of our countries must work hard and work together to ensure that no grass grows on the path of our friendship.

Doing that isn't always comfortable. It means supporting our governments when we can but criticizing them when we must. It means keeping them focused on the unsurpassed potential of the U.S.-India relationship, and not allowing small disputes, which will always be there, to throw us off track.

You may not know this, but in addition to being the biggest lobby in Washington with a total staff of 500 people, the Chamber of Commerce of the United States is going to spend some $50 million dollars this fall to educate voters as they prepare to choose new Senators and a new Congress.

We'll endorse candidates from both parties who support free enterprise and open trade, and we'll oppose those who don't.

We have our own law firm that regularly sues the federal government on regulatory and other matters. And we have an Institute for Legal Reform that is dedicated to stopping excessive and frivolous lawsuits.

Our systems are different of course, but I think these activities give you a sense of how seriously we take our responsibility to work for policies that spur growth, expand trade, and create jobs.

There's one more initiative we just started last year and we are very excited about it.
It's a positive campaign to educate, inform, and remind all Americans that it was a free enterprise system based on the values of individual initiative, hard work, personal responsibility, reasonable risk-taking, and a reasonable level of taxation and regulation that built the biggest economy in the world. And, it will be free enterprise that leads us into the next wave of prosperity. It's the only system that can create the 20 million jobs Americans will need over the next ten years.

Expanding trade all over the world, while keeping our own markets open at home, is a priority message of this grassroots campaign. Trade is how we will create the jobs we need and generate the growth we must have to reduce our deficits.

India is a critical part of this equation.

And so thank you again for your wonderful hospitality. The Chamber and CII are proven trailblazers when it comes to strengthening the bonds of commerce and friendship between our countries. Our continued, vigorous leadership is needed now more than ever.

The Chamber will be there. I know I will be there too. Together, let's turn the extraordinary potential of the U.S.-India partnership into an extraordinary reality.

Thank you very much.