San Diego, CA
July 13, 2009 

Perspective on India-US Relations

It is a great pleasure to be here in San Diego and I am particularly grateful to the World Affairs Council for hosting me. 

I could not have chosen a more appropriate destination. California is the largest state and it is home to the largest number of Indians in the United States. California, along with Bangalore in India, became the metaphor of the new age relationship between India and the United States. San Diego, the state’s second largest city, represents so much that is at the heart of India-US relations: its pluralism and diversity; its vibrant information, telecom, biotechnology and pharmaceutical centers; its significant Indian American population, estimated to be around 18,000; its universities and laboratories; and, its vast naval bases that host two of the largest aircraft carriers, USS Nimitz and USS Ronald Reagan, which have participated in joint naval exercises or port visits with the Indian Navy in recent years. 

More broadly, I believe that in federal democracies such as ours, the views from outside the capitals are as, if not more, important than what we get accustomed to hearing in the capitals. So, for all these reasons, I have looked forward keenly to the opportunity to exchange thoughts with you on India-US relations. 

India-US relations have undergone a historic transformation over the course of the past decade, beginning with President Clinton’s visit to India in March 2000 and Prime Minister Vajpayee’s reciprocal visit to Washington DC in September of that year. President Bush and Prime Minister Mannohan Singh through their sustained commitment and leadership, took the relationship to a new level. We now have a new Administration in the United States and a government in New Delhi, which has just returned to office with a fresh and a stronger mandate. 

President Obama and Prime Minister Singh have reiterated a commitment to continue the process of further strengthening the relationship, to build on the impressive progress of recent years to build what Secretary Clinton described as the third level of India-US relations. We have set a vigorous process of bilateral engagement immediately after the elections in India were completed. Our Commerce and Industry Minister Anand Sharma was in Washington in June. National Security Adviser General Jim Jones and Under Secretary for Political Affairs Bill Burns were in India last month, and Secretary Clinton’s visit to India later this month will establish the framework of our engagement and priorities in the coming years. 

From the perspective of India, transformation of her relations with the US has been probably the most significant feature of its foreign policy over the past decade. Our relationship is wide-ranging and broad-based. We have nearly 30 forums of bilateral engagement, spanning virtually all aspects of human endeavour. Our political dialogue has grown to an unprecedented level; our strategic understanding has deepened and encompasses both our region and the world; and our bilateral cooperation has entered new frontiers.

We now speak to each other on crises and challenges around the world. We are, for example, working together to advance our shared goals in Afghanistan. Indian assistance, now over USD 1.2 billion, is making a major contribution to reconstruction, development, relief and capacity building efforts in every part of Afghanistan. 

Our militaries, once unfamiliar with each other, now hold regular dialogue and exercises in the air and on land and sea. They mounted jointly a humanitarian mission in the wake of one of the most devastating human tragedies wrought by the tsunami in December 2004 and are now coordinating efforts to combat piracy off the African coast. We have for the first time begun to source significant defence equipment from the US – and 2008 was a milestone – although our defence trade and technological collaborations still lag behind the progress in military exchanges. Given the new opportunities for partnerships between our companies with the opening of the defence production market to the private sector, including 26% Foreign Investment, we hope to see more progress on this front. 

Our counter-terrorism cooperation, which actually precedes 9/11 but saw modest progress until now, has acquired new momentum and substance after the Mumbai terrorist attack in November 2008. Our agencies worked together on intelligence sharing and investigations in a way they have never done before, laying the foundation for more robust and productive cooperation in the future. 

Nothing symbolizes the transformation of the relationship more than the India-US civil nuclear agreement, signed in October 2008. Neither government could have persisted with this extraordinary endeavour without a strong belief in the importance of the India-US relationship; and without the recognition of the need to address a complex issue which has constrained both our countries from realizing the full potential of our relationship. The agreement will deepen bilateral ties, create opportunities for US companies, and contribute to advancing our shared interests on energy security, climate change and non-proliferation. But, this agreement is as strong on symbolism as it is on substance. And, it will also provide a foundation for a wider and deeper engagement between our two countries. We are now in the process of implementing the agreement. 

There are many other examples of our deepening cooperation at the level of governments: India’s first moon mission in October 2008 carried US payloads; our knowledge initiative in agriculture; our widening engagement on exploring collaboration in clean and renewable energy; and our e-learning initiative that has linked 20 US universities with 42 technical institutions in India. 

The strength of the relationship between our governments is underpinned by the vitality of private partnerships and the warmth of ties between the people of the two countries. 2.7 million Indians, who have made the US their home; 94,000 students; and, the hundreds of thousands whose lives are now intimately linked by air transport, fibre optics and satellite signals, are bringing us together. Their enterprise, energy, skills and capital are fashioning shared endeavours that are developing new solutions and creating new opportunities. 

India-US trade has doubled in the last four years; US exports to India have grown three times during the same period. While the US is the largest source of foreign investments in India, Indian direct investment into the US has also been growing rapidly and, in fact, on the basis of annual flows, exceeds US foreign direct investment into India in recent years. Indian investments have gone into manufacturing (including chemical and steel), mining, information technology, and services. 

A recent study by Ernst & Young shows that there were 143 Indian investments in 2007 and 2008 across various sectors in the US, ranging from a few million US dollars to a billion dollars. Contrary to perceptions that investment and job flows in the IT sector are a one-way street, nearly half of the Indian investment and new ventures were in the US IT and IT-enabled sectors. Beyond the statistics, however is the reality that, in many ways, India-US partnerships have shaped the evolution of the knowledge economy and new sectors such as IT-enabled services, helped sustain US competitiveness in IT and other sectors and contributed to sustaining, as a recent study has shown, 300,000 jobs in the US directly and indirectly. This partnership has also benefited India immensely, including by catalyzing the arrival of the digital age in India and promoting greater openness in the Indian economy. It has had a profound impact on the positive development of the India-US relationship, beyond the business sector.

While warm ties and close partnership between our two democracies now seem like a self-evident truth, it was not always the case. For much of independent India’s history, our relationship was constrained by our divergent geo-political perspectives conditioned by our own circumstances and priorities. The end of the Cold War and the opening up of the Indian economy in 1991 opened up new avenues for productive engagement. 

The importance of the shared values of democracy, pluralism, individual liberty, rule of law and enterprise in fostering relationships cannot be overestimated. India and the United States also have a shared historical experience of colonialism and the transformative power of democracy to bring about social change and inclusiveness. But, these shared values are not sufficient conditions for bringing countries, separated by oceans, into close partnerships, as our experience shows. Indeed, the change in the relationship is anchored in India’s own transformation that began with the economic reforms in the early 1990s and the global engagement of an increasingly dynamic and self-assured India. 

India considers partnership with the US important for achieving its national development goals. Similarly, the economic progress of one-sixth of humanity in the world’s largest democracy provides potentially a large market for the US and an anchor of stability in the global economy. Our investments in infrastructure over the next five years alone would require at the very least USD 500 billion at Indian prices. Whether it is increasing power generating capacity five-fold in the next 20 years, or connecting India with itself and with the rest of the world, or providing a wide range of services to the burgeoning urban dwellers and farm-dependent rural population, India presents huge challenges but also enormous opportunities. 

Democratic India’s rise will, in its own modest way, stand as an affirmation of the universal values of liberty, democracy, pluralism and freedom of enterprise; it would be a factor of stability, security and prosperity in the world, especially in Asia towards which the centre of gravity of future challenges and opportunities is shifting. India and the US share many of these concerns and challenges. 

India’s neighbourhood is the epicenter of global terrorism. Behind their different names, the terrorist groups have seamless links, shared ideologies and a common target in free and open societies. We have shared stakes in Afghanistan’s evolution from instability, and Pakistan’s transformation from a safe haven for extremism and terrorism, into stable, democratic, moderate and peaceful states. 

The arc of proliferation around India has irrevocably altered our collective security. The intersection of proliferation and terrorism in India’s neighbourhood presents a grave risk to all of us. India and the US have shared more deeply than many other countries the goals of non-proliferation and a nuclear weapons free world. The civil nuclear agreement has now created a platform for us to cooperate more on advancing our shared goals on non-proliferation. 

Protecting the sea-lanes of communication, combating piracy or responding to natural disasters – 70% of which take place in the Indian Ocean area – are some of the other challenges that call for our closer partnership. We also have a shared interest in working for an Asia shaped by cooperation and co-existence rather than by conflict and domination. 

As we look to the future there are several challenges:

One, we have to address the current global economic crisis, shape institutions and regulations to reduce the risk of its recurrence, and sustain the climate of openness in trade. We should also make a strong thrust towards expanding bilateral trade and investment, and create conditions that empower and enable our people to seek better lives. 

Two, India and the US face similar challenges in the energy sector. Working together for clean, renewable, affordable and reliable energy supplies that also meet our national security interests will be a vital aspect of our partnership. This would, naturally, also involve exploring all technological options for a greener economic future. The energy intensity of the Indian economy has declined by 50% since the 1970s. Our per capita emissions are a fraction of US or even Chinese levels. While we have 400 million people without access to commercial energy, we have to minimize our reliance on fossil fuels because of their growing scarcity, vulnerability to imports from a volatile region of the world and impact on global warming. We now have in place an ambitious National Action Plan for Climate Change, overseen directly by the Prime Minister. India-US partnerships can accelerate the development of solutions to achieve our goals. 

Three, around the world, potential food shortages and water scarcity threaten economic progress and carry the risk of unrest, instability and conflicts. In the past, the India-US partnership ushered in the Green Revolution in India. We need a new global thrust to increase food production and nutrition. 

Four, US leadership in medical sciences and India’s own progress in making drugs at affordable prices offers a unique opportunity for collaborating in addressing global pandemics and diseases, including Tuberculosis, Malaria and HIV/AIDS. I do believe that our collaboration, based on our respective comparative strengths, can help provide affordable healthcare to our citizens. 

Five, we have synergies of resources and skills to develop new tools for education and learning. As the world acknowledges the power of India’s intellectual capital, we, in India, recognize the role the US has played in establishing centres of higher education in India. There is considerable scope to expand educational partnerships. 

In each of these areas, whatever India and the United States do together will not only benefit the people of our two countries, but will also change the course of people’s lives elsewhere in the world. It is this responsibility – indeed, duty to the people of this world – that must continue to guide us in the days ahead. 

India and the US, as two proud and fiercely independent democracies, will have their differences, inevitable because of our respective circumstances, geography, experiences and stages of development. But, our disagreements will not turn into disputes. Indeed, our differing perspectives can bring greater value and insight into our common endeavours. Our relationship must be driven by our shared purpose, not constrained by challenges elsewhere. 

Having returned to serve in the US after just over a decade, I notice here, as I have in India, a new sense of excitement, goodwill and recognition of the convergence of our values and interests, which will steer us towards our goal.

Thank you.