tv Indian Business Representatives Discuss U.S.- India Economic Ties CSPAN June 6, 2016 8:35pm-10:03pm EDT
i am senior fellow and chair in the u.s. india policy studies here at the center for strategic international it to studies. for those who are veterans, the first thing i'll mexico is i a&m your security officer here, so just in case we have a tornado or locust or lightning or something else you'll see me rates my hand and follow me in orderly fashion and we'll leave the building and go across the street. so, other staff members around you can help out as well. so, here we're here to talk today about previewing the visit to washington, dc by prime minister modi and very pleased to have the partnership of confederation of indian industry for this event and the leadership joining me here on stage. this -- i think you look at later today and air india one to arrive in washington, dc, a
visit to arlington cemetery, engagement with think tanks, other events both with the administration as well as with congress. modi's fourth visit to the united states since becoming prime minister of india just two short years ago, and the third focused bilateral summit between president obama and prime minister modi. bilateral summits all the questions we get is what is the significance or important about these meetings if we don't see a nuclear agreement lake we died in 2005 was ate successful visit which is a hard measure. the fact you have such a frequent engagement between the two is the reason and indicator of progress that we have seen on a wide range of fronts. u.s.-india relations today are the strongest you can say they ever have been. probably bit more sew on the defensive security side. last year on the release of the
joint -- the initiation of projects under the defense technology and trade initiative, the renewal of the defense framework agreement, coming together of high level principles. the numbers on econ are pretty good. india is the fastest largest growing in the world. foreign investment is setting record levels, and the numbers are pretty good but i think the perceptions of what you see written a lot of times publicly has modi done enough reform, enough happening on the ground there? and at the same time from the u.s. perspective, when you think of a lead are summit, the united states and india are dill step divided on global trait issues. we're not part of the same emerging trading blocks right now, and even our own attempts to negotiate an investment treaty announced eight years ago
are further away today than the were eight years on we we first announced or intention to negotiate a treaty because both governments changed the model are in which they initiate negotiations. so a summit 0 may be up likely to bridge at the divide on global trade matters but can help point news the right direction. pleased to have such a great panel to join me and offer a preview what we might expect to see during the modi visit and general perceptions on what is happening in india and the united states to further our engagement. let me start with the person to my left, naushad forbes, cochairman of a information firm, roots in the united states, a lecturer and consulting professor at stanford university from 1997 to 2004. next to him is shobana a kamineni.
most of us that travel to india keep him on speed dial in case something goes on. she is herself busy build ought the hydrobusinesses apart from the hospital group, including india's largest pharmacy. next is my dear friend, ray vicary. a counsel -- -- ray, one of washington's original india hands and a long-time mentor of mine when i began my india journey 20 years ago itch met him after he stepped down as the assistant secretary of commerces' we accompanied president clinton on his india trip in 2000. what a time that was. we have stories some that are fit for the record. he me first turn to naushad. we look forward to hearing from you. >> thank you.
it's a great pleasure to be here. make a few comments around three topics, actually. first, a little bit on the indian economy and where we are and to address your question about is enough happening on the ground. second, on the trade policy front. and then third, sort of what does it take to really move from the potential in the india-u.s. economic relationship to actually getting that potential to happen on the ground, and perhaps we need to reset some expectations we have of each other. so, on the economic side and what is happening on the ground, the modi government came in with huge expectations. it raised huge expectations consciously in terms of promising a future that would be very different for india, very positive for india.
i think we have seen a whole slew of different programs he has launched. things on the ground, whether it's during business, i would not underestimate how difficult a job it was to turn that ship around and to move from a situation where each year we became a more difficult flies do business, to startling to become an easier place to do business. we have a long way to go. the prime minister himself recognizes that. he set a target we should be in the top 50 of doing business, innovational time frame, and we have a long way to go. without question. we're number 130 at present, but the most positive element is tapping into something i know that is very dear to your heart which is federalism, where now very conscious november to try to get indian states to compete one with the other.
they rank each other, they rank themselves on a whole different set of criteria each year, and last year the government -- they said they would shame states, they said they would lift states and list their rankings and many of news business were skeptic:that when push cam to shove and they came out you wouldn't see to much there. so countries' expectations, everything was put out. to our great surprise it wasn't just -- but talked about the rankings, we found the state that was second in taking full-page added out in the paper saying, we're number two in doing business. and then we had our states saying, we're number one in even starting a business, even though it's number nine overall and so on there was this competitive dynamic unleashed. second, if you take infrastructure and
infrastructure investment, there were many stories, projects in the country, many of those have started moving. if you look at investment, particularly in the world sector, there's been fairly dramatic turn-arounds in many projects that were -- even more many new projects and are happening on the ground, and we have a body that brings together many different industry associations. ascon, and we have a construction equipment manufacturers association, and now for about eight or nine months they've been reporting increased in orders and increases in shipments that are ranging between 40% and 50%, and that's the most tangible illustration of things actually happening on the construction side because all these infrastructure, buying a lot of
equipment and things for them so they can get to work and start these projects and see them move. many other useful things being done. the bankruptcy reform, which long needed by the country, and passed about two weeks ago. everyone is concentrated on gfd, the car again goods and services tax. without question it will be a game-changer for india but everybody is focuses on the fact that gsd has not happened. we should recognize it will -- it's a question of when, not if. it will happen at some point. it's become a politically -- become a political football between the government and the opposition. there isn't tangible difference on what they're supposed to do and what the law is about. the differences are purely political. the obstacles are purely political.
but when we focus on the gsd we miss the many things that have happened on the reform side and happened on the legislation side. the last year, the upper house of parliament in india, where the government was in the minority, and therefore needs to rely on our position support to pass legislation, passed 64 bills, and we missed that. we focus on the fact that gsd didn't get passed but there were 64 bills that did, and those bills tended -- many of those were economic reform bills and they happened with cross-party support. so there's a lot that been happening on the reform side, both from legislative perspective and from a government notification perspective. without doubt even more -- that we look forward to happening and just two areas and then move on.
two areas are, in the last budget, the finance minister announced almost in passing, it seems to me a truly landmark announcement. he said every new central government scheme would have a sunset clause and a clearly defined outcome. sounds very basic and if you're in business it's really basic. if you're in government, i think it's quite as aspirational, and turning to reality on the ground can be transformative for the country. having a sunset clause, we have a huge number of -- many of which are not understood, which continue forever, and often do not have that much takeup. if we actually have a sunset clause, that's very powerful. the second thing announced, use the direct benefits transfer.
one of the top three budget deficits items, and the top three -- the first -- he said the direct ben fenn fit transfer from to provide benefits to farmers and move away from providing subsidized fertilizer. again, a huge potential area. one that can have truly dramatic consequences as it goes out. he announced it as a pilot program but as these things get underway and start showing up on the ground, they can be very -- a comment on trade policy. i think for too long our trade policy stands in the country has been defensive. it's been focused on how to restrict the access to foreign countries to the indian market ask we starting to see a change in that. year e we're starting to move to
looking at how indian firms can be much more aggressive and outward looking and how our trade policy then needs to reflect that outward looking sentence by matching that stance and being much more focused on how do we improve access to foreign markets. the developed markets, the developing markets, for indian firms. i think that cheng in trade policy stance would be dramatic in changing or negotiating positions. i think we will go from -- to a much more give and take, not only take, it's going to be a give and take which all trade policy negotiations have to be. you have to -- not every sector will benefit but on balance, the economy is expected to benefit. nafta is a perfect example of how that has turned out for the ben photo of all three --
benefit of all three countries without necessarily being the three -- benefits one accepted but all three countries, most observers would look at nafta and say it's been very positive for all three countries. >> nor not read you to run for profit the united states. >> no, no. finally, comment on my favorite theme, which is the potential of the -- i agree with you that the india-u.s. economic relationship is strong. it's strong on the basis of individual company connections. and individual company participation both ways. there are many, many companies from the u.s. that are active in india and have been active many years, strong investors, strong contributors to the country and are seen as many companies, even indian brands sometimes.
what -- many indian countries are active in the u.s. we did a report last year where we estimate that indian investments in the u.s. have created 90,000 jobs in the u.s. this is useful investment, and an illustration of the bilateral relationship and of investment flows and economic benefits flowing in both directions. we currently -- bilateral trade is another 100 billion, our two leaders said let's take it to 500 billion. that's a great aspiration, how is going to happen? we have to have the right expectations of each other and if you will forgive the advice, seems to me that sometimes u.s. expectations of india on an economic front are -- that the
u.s. expects india to be like china. it expects it to be systemic, organized, top-down, everything happening as announced inside. i think the u.s. should expect india to be like the u.s. which is expect a noisy democracy to operate like a noisy democracy. expect it to operate with contention. with obstruction, will thing not going as logically as one would expect. with hearing candidates saying things that shock one. and some of what they say you have to take seriously and some of it you have to discard and do that in india as well. and i think if we treat india with the same glasses as we treat our own politics in the
u.s. i think that would be very productive and give all my colleagues and friends in india exactly the same advice. but when the u.s. congress says something that doesn't mean the u.s. says it. i spent so many years at stanford, and living on the west coast, i was always taught to be suspicious of washington. and this made me very comfortable, because growing up was always thought to be suspicious of delhi. so, i was very comfortable with the perspective and we have great cultural understanding and commonality of thinkings and mindset and approach and as we approach each other with that perspective, we can go very far. >> good morning. i think that probably spend the
next almost ten minutes filling in the white spaces -- >> a lot of white spaces. >> very few but i'll get on subjects that are of personal interest to me. oning the thing, i grew up in america and then my dad was doctor and decided to come back to india, and that was the beginning of the brain drain when he started up this company and said he can do things as well in india. of course we do take a lot of u.s. help. so i think that's where american dominance -- that you have the. and ability and what you can give people. concentrate on the soft side, and coming to the soft side, you know. prime minister modi's always been in the forefront, visiting many countries and visited countries mostly being europe, the first lead for go here or
the first -- for the first indian leader to visit the country, but i think what is very significant of tomorrow's visit is the fact that here he is, making his fourth visit to the united states, and at a time when the current president is an incumbent, and that really shows that his intent that india is beyond what the politic of a country or two great leaders can do but up to people to build on the foundation that has been created of the years, and i think that's important. that we need to take -- move that forward. and having said that, i think that one of the areas that i'd like to concentrate on is i was surprised coming into the meeting -- i spent most of my life looking at health care and now i have a broader perspective, but if you see the
investments that american companies have made in india to date, and the investment by indian companies in the u.s., it's equal. it's about 14 billion. but the interesting thing is there's a lot of money that is coming to india on the equity side and i think those really tell you the opportunity that is available, because that money is not coming for free. it's extremely fungible, and realize the potential, the business potential of a country like india. and this is where i think that -- has spent a lot of time talking about what the indian economy is. for me i have great hope that we have all been through really pretty bad time, when most countries would say, why are you complaining when you have a growth between five percent to seven percent but we have inflationary pressures, high interest rates. now we're looking at the what
the government has stepped up. really moving to clear projects the projects -- a lot of companies, the infrastructure companies, have got into financial distress because of projects. the fact they're really moving to clear those -- to move -- i think is a clear sign of progress. the second part is most -- i'm sure the u.s. also, at the beginning of the year, they head have to budgetary allocations and aren't spent but here we're actually talking about industries -- we spent our entire budget. that's positive. the fact that so much money is being invested. money is being invested in our roads in our ports, and all these are clear indicators that you understand importance of infrastructure. you realize the importance of
energy investment, and -- but the government -- they're cleaning up the bigger picture of our distribution companies that have been making losses, and that is important. they're cleaning up in terms of information systems that everybody has, that everybody has access to a bank account, and subsidies will flow through that. and what you see on the ground when you come to india and get out of our new fancy airport -- 22 new ones being built, but when you get out of the fancy airports and you get off the freeways, you actually seeing the slums, seeing the dirt, seeing all these things, and i think that in a few years, -- i like that idea of cleaning up india, and that is really caught the imagination. the fact that we are mandated to
spend two percent of profits on activities and giving back, i think that created a significant amount -- it's $10 billion or more, which is available every year to put to projects. that's the soft side, and that is important to us. it's sticking to some of the trade ideas. if you see -- you know, india and the u.s., it's tourism, education, again if you see more students who come from india to the u.s. and opportunity this reverse. we have 150 million people that need to be skilled by 2022, and if we want to create the demographic dividend of creating productive people, improving the economy, i think it's a huge opportunity that everybody can
take that we need to move the skills and the u.s. really has the ability to pass those on every level. >> you have spoken about competitive federalism and i'd like to see that one of the things that we have been advising u.s. companies is it's important to make your connections in delhi but it's more important to move into the states and talk to them and they will move projects faster and you can actually see what you need. i've spoken about youth. just think about the capability of india. this is what really excites people like amazon and uber and google and microsoft and facebook. the fact that the most number of users coming up and the youth that are using it, can you imagine we have 300 million people that have phones and out
>> and i'd like you to pause and see how many u.s. companies that have come to india have actually left. what they've done is that they might grumble that the business projections were not as fast as they should be or whatever their boardrooms say, but i can tell you that nobody has left the country seeing that this is not a place that we can work with that. and i think that's a very, very important differentiation. the second differentiation that i'd like to bring to you the fact that today the big companies that are in india are actually making significant contributions to their, to the
bottom lines of their -- and top lines -- of or their companies in the u.s. and i think that's important. it used -- it never used to be with that. it used to be that india used to be a mice place to play. -- a nice place to play. but now the places that i am associated with are seeing quarter after quarter significant revenues, and this will continue to improve. and that's why i think the ties are very important. i'd like to leave you with the last perspective, and i think that why it's important that we continue a very fruitful dialogue at many levels is because we both are countries that are committed to the same fundamental ideas of not just democracy, but democracy for the benefit of our people and for peace in the country. so i think that's very, it's a word that's not used enough.
and india is the only one that can rightly say that, you know, it's important for us to stay peaceful within our states, it's important, and that's why having a strong, stable government is important. it's important to have peace among our neighbors, and we continue to try to have those dialogues. sometimes it becomes a bit stressful, but it doesn't mean we stop. and i think that's the engagement with the u.s., that the u.s. with can actually help may, and there can be significant learnings from that. so why is modi here? i think any leader from india and all of us will continue to make these trips over and over again just as you continue to come and engage with us. and that's really exciting. and more than anything i can tell you that our morning programming, it keeps us really busy in the morning, because we turn on cnn, and it's the best show on earth. [laughter]
so we're all waiting to see what's going to happen. [laughter] >> apologies to the camera crews in the room right now for that kind of -- [laughter] thank you. ray, the u.s. perspective on this. big deal on the horizon? things happening in india, other things companies want to see happen there? love your perspective too. >> well, first of all, i want to thank you, rick, for the opportunity to be here. as rick has said, we go back 20 years. i remember him as a fresh-faced kid with a lot of hair when he first came from michigan. thanks,csis, it's a great privilege to be here. i think the question really is why would president obama -- who this'll be the seventh meeting with prime minister modi, why would he ask him and, again, why would modi want to come?
and i think this comes at a time where both sides want to consolidate the gains which have been made, and those gains are very, very substantial. rick has referred to the indian side. if you are the fastest-growing major economy in the world, 7.9% in the last quarter, you are the number one recipient of foreign direct investment in the world. this is a good time to look to the greatest source of foreign direct investment in the world which is the united states. from a u.s. perspective, i'm sure that president obama sees the gains by leaps and bounds which have been made particularly on the strategic and security side, the joint exercises, the trilateral arrangements with japan, the being able to work together in afghanistan.
a lot of people don't recognize that on this trip prime minister modi's first stop was to afghanistan to inaugurate a dam which is there. and we want to do more with india and not less. so i see these things as a consolidation of gains which have been made. i think it's important to realize that when we talk about values of democracy and so forth, we think we're talking about three different things. but the fact is all of those are related, and they are part of one reality. just when it's noon here, it's 9:30 in delhi. in fact, there's only one time
that's the present in which we are involved. and i think that the illustration which i will most capture u.s. expectations for this visit goes back to the civil nuclear deal. on the u.s. side, there are many who say, well, there wasn't really the fulfillment that should have happened in that regard. and there are hopes this time that westinghouse will be able to fulfill in terms of making the breakthroughs, offer for six new reactors, and there is the hope on the indian side that india will become a part of the nuclear suppliers' group. but the reality is that that
arrangement, the deal has been fundamental to progress on economic and strategic sides. the united states today is the largest defense supplier to india. $14 billion over the past couple of years. i expect that trend will be taken forward with this visit. everybody knows about the d, ti -- dtti, the defense trade and technology initiative. those matters are going forward, and i expect that there will be announcements which take that forward. so this is a good time for consolidation, bringing together gains which have happened economically, strategically and in furtherance of mutual values. but there's still a lot of work to be done.
i don't think that there's any secret that there's a rising tide of protectionism in the united states. all you have to do is look at the presidential election where on the right and the left you have two candidates who are basically saying the same kinds of things in terms of involvement. on the indian side, there is the side to make in india that everything ought to be -- or a large portion of it ought to be sourced locally. and if you look at what happened in the last budget, actually tariffs on some of the exports from the united states rose rather than going down when india already had the very highest tariffs of any major economy and was really outside the norm. so why come at this time? it seems to me at this time it's good for both sides to take a look at what the mutual advantages are and not get swept up in this.
one of the great things that we've had in the united states is a strong, bipartisan support for u.s./india relations. the prime minister is going to a joint session of congress. what better opportunity to be able to cement now -- regardless of what happens in the fall elections -- the strong bipartisan support and beat back some of those who say, well, wait, we didn't get this or we didn't get that or i'm concerned about this ipr or i need to be able to do this. and to say to the american people that the reforms, which sometimes are referred to as big bang reforms, are till on the agenda -- are still on the agenda and are still going forward. and we look, first of all, at the goods and services tax. the reality is that modi has
pushed that about as hard as he can. it's kind -- you know, dr. forbes said there are many things in common. one of our problems is that we're too much alike in the sense that modi would have gotten that reform through if it hadn't been for his own legislature. on the u.s. side there are a lot of reforms which would have happened, but congress and the president couldn't get along. so we need to be reminded of that and know that something like gst -- which will make a single market out of it, and the diameters of that market have somewhat been painted already when you have 54% of the population under the 25, many, many computer-literate -- it has to be attractive to apple, amazon, cisco upon which
advisory board ms. kamineni serves. those are reminders which need to be put forward by both sides. i think that this is an excellent time also to recognize that there's a commonality in vision between the united states and, certainly, the modi administration in regard to u.s./india relations. the fact is that prime minister modi and president obama see india as not just a regional leader, not just somebody who can be of help in regard to what happens in the indo-pacific region, but across the board that we as the two largest democracies, and i would argue the two greatest democracies in the world, have so much in common. and that starts with our
economic enengagement. engagement. we have to be able to get that right. we have to be able to come up with a common vision in regard to wto and what happens with tpp, what happens in regard to trade. that has been a real hack. and unless we can do that, and i expect this visit will contribute to it, we'll not be able to realize that vision. but this is a good time for consolidation, and it's a good time to set a foundation that regardless of who's elected in the united states, that we will be able to go forward and fill that visioning of being able to work together and be able to further the values which we have in common. >> great. well, thanks, ray. i'll open it up to the audience in just a second, but i've got a
couple i want to bring up to the panelists here. you look at what might be on the agenda for discussions, and i'm sure there's pockets of people running around washington, d.c. right now trying to dot the is and cross the ts on the last couple of things that will go into various joint statements and other papers released in the next couple of days. but one issue that's come up, i think significantly from the indian side, certainly over the last year, is stronger u.s. support for india's interest in apec membership. the united states, we look at it as a place for developing good draft model regulations today, but also the united states looks at it as an organization that we hope will move boo into a trade agreement, an asia-pacific-wide trade agreement at some point in the future. i wonder, naushad, if you could talk a bit, what's the policy that groups see from the government there? do they take a lot of decisions with sort of the backing and support and discussions with industry ahead of time?
do they tend to lead and then have conversations after the fact? i mean, what's the interaction ahead of events like this when apec comes up that you sort of see. >> if government -- see from government? >> the government has a mechanism called the board of trade which ray represented on, and many industry groups, secular groups are also represented on. and it's a formal, it's a formal process of actually discussing what the different requirements and different sectors of the economy are. so there's constant consultation. and, i mean, they're these formal structures. i would say generally the more useful discussions tend to happen in smaller groups and tend to happen in more, in deeper, small discussions on specific issues. and apec is a topic that we've had discussion with the government on recently, and we think there's a real renewed
drive and focus from the government and from very high levels in the government. from the finance minister, for example, who's made many, many statements, strong statements in support of india's apec membership. and there is a hope that we could see that turn into reality towards the end of the year in peru. >> you know, shobana, you mentioned something about trade or business and peace and kind of the relationship there. and, you know, we have these discussions, two huge countries, two huge markets, two huge democracies coming together for conversations on economic engagement. but in terms of running a business both from your own business as well as from your perch of the leadership at cii, i wondered if you could talk a minute, i mean, the united states we do think a lot, and i know that one of the main interests of our department of state in engaging india is looking at kind of regional connectivity across asia as a business and as a business association. can you kind of put it into
context? how much time and energy do you think about engaging the big markets that are far away, you know? the united states, europe, japan, places like that, you know, versus some rell the tyly large neighbors -- relatively large neighbors that you have as well? i think we could put pakistan aside, but let's say bangladesh, myanmar, places like that. how much time and energy is sort of spent looking at the near-term relationships and even into southeast asia versus engagement with some of the big, developed markets? >> so from a cii perspective, and i think that cii, of course, is the largest in terms -- industry body. but even the smaller ones, the big countries have constructed groups, like crushes ii has the -- cii has the india/u.s. business council. we have it with germany, we have it with japan, all the big economies. but what we're seeing is that --
i mean, actually, the great interest which is taking shape with our neighbors. so every time we mount a delegation, in fact, we were in myanmar two weeks ago, and with us there was something like 20 people, you know, came in. and i went there mostly as part of an industrial, as part of, you know, the delegation. but i actually saw opportunities that we should be engaging which had interesting markets. so it's an important market that we've always been kind of, oh, interested in, and some of us have been there. we have a hospital in bangladesh. i know that another company on the board of health is creating a huge two-wheeler company in bangladesh. lots of interest there because it's on that, it's on our northeast border. and now that the bad areas are removed, so the trade. we actually have a trade
agreement with cambodia, laos, myanmar and vietnam. so goods, you know, lots of the goods that are unfinished go there, get finished, and they can move. so that's an interesting route. >> yes. >> for countries. and everyone is looking at those. we have engagements with sri lanka, we have with many of our neighbors. the middle east is an interesting one that we've always had great connections with, and i think that prime minister modi has made several visits, and i think that there's renewed engagement. i've made a couple of trips there. but the big one is africa. i think that's the last unexplored continent, and i can tell you that as much as wherever we go we see the china footprint, but over the last few, you know, the last two years that i've been traveling to the cis africa and many of
these countries, while the u.s. is a natural partner, china has done a lot of work to get in there. but now they're talking to india with. india has a seat at the table. so it comes because we're engaging. >> yeah. ray, you've seen a couple of these times i think that u.s./india relations really began to take off and show new peaks, you know, preceding my time, but the establishment of the u.s./india business council back in 1975. your work to get ucica off the ground in the '90s, the nuclear agreement, the in and out of 2005 and carry it forward. how do you put the current state right now versus those other peaks? does this feel demonstrably different, or is this kind of reminiscent of times that we've hit? do you think things are less easily reversed at this point? how do you put this into context from the other times we've seen a period of positive momentum
similar to? >> i'd say it's at an all-time high, rick, not because of the statements that are being made on each side, but because there's a growing substance on every part of it. while you have problems that you can point out, you can point out reality is that if you're looking at trade, investment, if you're looking at strategic matters, they have reached heights which were really undreamed of at the time, say, that -- when president clinton went in 2000 and we worked on that. or even if you go -- >> that's the week i lost my hair. [laughter] in case you're wondering when that was, 2000 waiting for a bus to arrive. it just all fell out. >> well, i don't have much left
east, so i sympathize with that. so i'd say that's true. but that doesn't mean that you, that the past is prolonged. necessarily, you're going to have a continued upward trajectory of it. the reality is that when you have gained a lot, you still -- you have a lot to lose if it doesn't go right. and so i go back to my point about the necessity of being able to work out so that it truly is a win/win situation on either side. i was very glad that dr. forbes talked about indian investment in the u.s. about $15 billion, 90,000 jobs. now, that's something new. for is so long -- for so long you only thought of india in terms of what u.s. investment
there was, and we have, we have a two-way operation. now, that two-way can go away very rapidly. all you have to do is look at the fights over h-1b visas, totalization agreements, what happens in services, and all you have to do is look at apple not being able to sell directly to consumers which is sort of a non-starter, and you look at -- so on so many sides we are at a height, but we have to keep that momentum going, and i'm hopeful that this visit will do that. >> yeah. great. well, we have got about a half hour, so let me open it up to the audience. desi, up in the front here. if everybody can, please, let us know who you are, who you represent and keep it relatively brief if you can, but, desi, thank you for being here. >> thank you. [inaudible] >> experienced india hand.
>> experienced. [laughter] >> i wanted to pursue with dr. forbes a little bit -- [inaudible] there are really two of them, and the one that has, in many ways, the -- [inaudible] it's a multilateral one where -- [audio difficulty] negotiating relationship that's been toxic even when the personal relations between the negotiators has been good. what i really wanted to ask you though was about the politics -- [inaudible] i got an earful in early april on india's anxiety about joining apec. that was about the impact of the trade -- the tpp -- [inaudible] if you found a message in your
e-mail inviting you to -- [inaudible] [laughter] how would you deal with the winners and losers aspect of it within the -- [inaudible] how can the government get past this conundrum that everybody wants to liberalize -- [inaudible] >> i think it's a great queson. it's exactly the issue that we grapple with all the time. but if i may say so, i think it's the issue that all countries in trade negotiations have had to grapple with, which is how do you deal with an individual industry sector that might be a loser in a particular agreement even though the broad, the broad benefits would be much greater as a result. and i think it's an issue of how do you articulate that in a
persuasive, comprehensive way and keep going at it with the groups? and there are various means that have been used, i think, in these processes. you have, you know, transition periods that get negotiated where you say, look, there'll be an adjustment period of five years or sometimes even ten years, you know, for a particular sector that's very vulnerable. and i think one can address some of those concerns. i think also that for a country like india, uh-uh think we can actually -- like india, i think we can be much more positive about the benefits of trade going forward because there's just so much more to do. you know, we're in a market that is growing rapidly that's expected to grow rapidly for a long period of time, and if you're in that, in a market that's growing rapidly for a long period of time, then maybe as a result of a particular trade agreement, maybe that industry grows at 5% instead of 10% over the next ten years. and, frankly, that's much easier
to handle than if you had an industry sector that might actually see a decline, an absolute decline in output. so i think it's possible to deal with sector-by-sector, but by constantly coming back to the winners and focusing on the winners and what the potential is and how the dynanic that can be -- dynamic that canning be unleashed is new and different. one last comment which is i think one of the single benefits of trade that is, i think, always underplayed are the technology benefits. and i'm not talking about technology flows in a formal sense, but informal feedback from selling to good markets around the world. and the feedback that you get from being an active exporter is so powerful because it tells you whether what you're doing is decent quality or not.
and how do you get to be really good quality. and it equips you to cope with competition at home like nothing else. so i think the benefit of actually engaging in international markets as a way of really competing very effectively at home a completely undersold part of any such trade stance. i think some countries are used trade policy as a very effective way of reforming markets at home too. i don't think we have yet in india, and i think it's an opportunity for us to grab.
the reality is when you net out the jobs on the job front, it comes out a pretty much a wash, and then you put in the other kinds of things, and it looks like it really is a pretty good deal, but that's a very difficult political sell in this atmosphere. i think that the way you deal with it overall is good public policy, which meets the concerns about difficulties in our own country and, i think this is true in india, too. if you can have a strong and vibrant infrastructure creation program, that a lot of jobs are
created by that. and the edge is taken off those people who are in the companies who are losers because other people are stamping up to be able to do that employment. one of the things that's important to me, and it seems to be lost in the political discourse, is the very powerful impact internationally in terms of raising people out of poverty internationally. we speak a lot in the united states about religion and how we're going to help other people and so forth, but when it comes down to international trade, some people seem to forget that it's hundreds of millions of people in india that are being lifted out of poverty in part because there can be international trade. there was at one time, trade not
aids logan, and it seems to me that is a part, and it works both ways. it's always important to keep an eye on that. we got a lot of foreign direct investment from germany, from other areas, that are looking for what some people are looking for in india, cheap labor in the united states, south carolina, for example, all the manufacturing, bmws and so forth, that wouldn't occur, toyota in this country and those things have to be netted out and there has to be that kind of emphasis on it. so i think that in regard to india -- by the way, everybody want to by tasis new book on india -- that india has to be able to do some of that itself in order to help those people
who are clearly the losers when it comes to international trade. >> as much as we think today it feels like especially with u.s. india space, the rhetoric against i.t. services, youth outsourcing, seems bad. when you had a president calling companies that outsour benedict arnolds and companies say outsourcing is good, a study showed that every job that was outsourced resulted in 1.3 jobs back here in the united states. it fits on bumper sticker but doesn't sell the argument. every one job equals 1.3 jobs coming back. a very difficult argument toover come, measuring the winners versus losers. i see your hand up there. >> thanks, rick, and thanks for the panel. i've enjoyed so far.
my names sanjib working if a an organization called india diaspora, the people of indian origin and people interested in india. my question is for anyone on the panel that wishes to answer it. it's about central banking in india. somewhat esoteric. on the one hand we have heard about these efforts by the reserve bank to clone out the nonperforming assets and we heartbeat modi -- heard about where indian central banking is going. on the other hand we have heard just in the recent past talk about whether would be re-appointed. we have heard talk about more influence by the finance ministry in the appointment of the deputy governors at the reserve bank and more influence of the elected officials in the very setting of interest rates, the core function of any central
bank. so my question for the panel is, what is really, from your perspective, especially at cii, what is the relationship like between the central bank and the government and where do you see that going to moving forward? thank you. >> a dangerous question. feel free to give it your answer. >> the relationship is, i would say, broadly positive. a little like trade negotiations, pluses and minuses. and you have to look at the net ends up being broadly very positive. and it ends up being broadly positive because there is respect for the independent institution, the institution that at the end of the day needs to listen to the government, listen to industry, and then do what it thinks is right, and in industry, would we have like to have -- liked to have seen a more rapid softening of interest rates? yes, you probably would have.
but if there was going to be -- if you were going to take a risk on either side, we're okay with a more cautious approach, which is what the central bank chose to do. your question -- you're quite right in saying that the governor is one of the great central bankers internationally, and we think so, too, and we feel he has done a great job for the country. now, in terms of the relationship between the government and at the central bank? i think it's okay, actually. it's cauley quite positive, and if you hear the prime minister or the financialists speaking about the central bank and speaking about the governor particularly think only speak in positive terms and see the relationship in those positive terms. while at the same time making an argument for low interest rates. again, not very different to what you would hear in the u.s.
in terms of you usually -- i can't think of a time when the administration was arguing for higher interest rates and the fed was arguing for lower ones. it's always -- always goes in a particular direction. i think that's positive. that's a positive tension. >> just to add to that, think that it's important to understand that beyond the people, it's economics also, and both of them have the reading -- they're reading off the same page. that nobody -- both want in the indian economy to do well. even if wasn't -- wasn't there they would have had to address it bus it needed to be done and start before him. the signs were out there in terms of interest rates, i think that there's a broad calling from industry that we do need to
keep it lower, but if you see the budget that was brought up, it was a huge emphasis on fiscal responsibility and inflation so both of them are reading off the same page and substitute the people for the roles, and i think that is the interesting thing we have people in the economy that can be trusted to do the job, and both of them affect each other. >> go back to raj's first speech at the reserve bank. remember so visitly his opening line was something like, create a bulletproof balance sheet. that was just months after the united states had quantitative easing and indian markets took a dive after that. so india, especially month britts, survived that process and most of the policies
articulate in that first speech. i see rahm in the back. >> i'm rahm, the chairman of the company called -- a ten-year-old company, value over a billion plus right now. we are in the process of starting innovation -- when i was discussing with the director for the innovation park he was selling 90% of the graduates before used to go abroad, and now 90% are staying back. only 10% that leave. so is that the trend continuing, and also, i heard that there is a valley happening in 200-acres of lan which will revolutionize the technology. with that trend, what would happen to silicon valley? if you have a comment on that.
>> the u.s. silicon valley in the future? >> i cecil con -- silicon valley -- i mean, many years ago there was a book that compared silicon valley and route 138, and it actually took -- the first edition of the book said that route 128 was doing better, doing better because of large companies located there. and then there was a new addition edition of the book that showed how silicon valley did much better because of very vibrant startup environment, and many small companies, and simply meant you didn't -- your bets were not on a few large players, and if one of those bets went wrong, you were in trouble. just thousands and thousands of bets underway and that's silicon valley's strength. seems to be -- palo alto until
yesterday. if the traffic is anything to reflect the health of the economy, it's terribly rude health. >> good cars or bad cars? >> the good ones. tesla. >> you see teslas with all with free charging stations, which to me -- energy prices, is completely crazy. >> but i don't think that india has a monopoly on brains or intelligence. it's going to come from everywhere, but what worries me, maybe in both our countries, is that we might be losing out to other bigger countries that are investing so much on innovation, and cutting edge biology, chemistry, which are happening in china and these other countries or smaller, korea, all these -- but the good thing is that knowledge is getting
electrons mitted is getting transmitted and people are working collaboratively, and collaborative is underused. we could spend more time on that. >> dave? >> ihi. my question has to do with innovation making india that relates to energy. india's biggest imports crowd oil and spent anywhere from of 5 bill to 140 billion importing crude oil, and i know prime minister modi wants to emphasize the defense secretarior as far as making india. with the import of crude oil -- now for u.s. and india we face common threats in terms of climate change, as well as
islamic radicalism, groups like isis with the sale of crude owl. what's the role of the indian government for enabling environment for energy product innovation and how is the indian private sector working with the u.s. private sector to innovate in this area. >> on the energy side, i think that you must understand that the biggest investments now, apart from projects and gas, is the nonconvention of renewables. so much going on with solar, with mountain, wind, and the exciting thing that is cross-border hydroprojects, and these are the things that will help in terms of energy security, and the biggest thing to me in energy security is the government creating -- we had
certain states that have power and certain states that don't and we have a small bottle nextneck not rated to streaks, and we need to strengthen our distribution companies, making them profitable. once that happens probably india will achieve the state objective of having every village with power and will also have a stated objective of being able to create affordable power, and most states being powered deficient. so that's one side of the problem in terms of oil and gas imports, it's a fact of life that we do import oil, and we continue to find, as many other good economies that import oil, that we have to take this from a basket of countries, and this is the large part of our
negotiation. it helps us when oil is less than $50, maybe even lower, and the recent interest in iran, and the trouble is very important for our energy security. the fact that the u.s. is now allowing gas imports, that's another exciting thing. i think ray had spoken earlier we should be spending some time looking at coal and shale, and i think there are opportunities which are lying within the country, but we always continue to impour and it's a fact of life. the way would do it, efficiently, is important. >> and a substantial amount of the imports are reexported because india is such a major refining country, to not just the imports but you have to know about the exports. >> the largest import and our largest expert.
>> ray, written a book on energy. a topic your familiar with. >> you can download the book on the internet. india energy to solar power but charlie is the greatest expert in that regard. i think the question is very well-taken because the cooperation between india and the united states, turkly on innovation and energy, should be a prime part, not only of this visit but what happens at the strategic and commercial dialogue in august, and rick in csis have taken a leading role in regard to marrying up innovation and energy particularly in the innovation forum. i do some work in regard to incubators, innovation incubators at the national
institute for solar energy, in conjunction with the international solar alliances, an area in which the united states and india have a great opportunity, but you're quite right, with india, it has to be able to innovate. we are -- we've down some things flight the u.s. and one thing we have done rice is in regard to having an innovation ecosystem, mose symbolically in silicon valley but also 128, also austin, texas, and also a number of other places, and so the u.s. and india can do much, much more in this area than we're doing. >> we got about ten minutes left. can i ask if there's questions specifically related to the visit and announcement. if not we can go back to general questions. let me ask about the visit in particular. mose questions are general
issues so anybody that has questions -- >> we can talk questions on the visit in two days. >> tom, consultant. dr. forbes mentioned the revival of infrastructure construction. i wonder if you particularly addressed the infrastructure that enables trade with neighboring countries. i'm conscious of a lot of things going on with bangladesh in particular, and myanmar, obviously, and also with china because there's some anxieties connected with that, but on the other hand with the chinese investment in the silk road you think they might be interested in investment, both in transhimalayan things and things that go through -- a question for anybody who wants to answer. >> the road is huge. they're planning to link that
road and they're building a six-lane either way which will take them straight into europe. so i think the chinese have demonstrated the vision to be able to build large linkages and they're not limiting it to the chinese have huge investments in projects in india and have been invited so whether it's the pipeline projects, solar, whether it is -- most of our power plants now, the critical -- the supercritical plants are now coming from china, so i think that the fact that they're out for large projects because they're bringing cheaper financing, their pricing is much lower, that's the advantage. so they're participating without any borders, boundaries. wherever there are opportunities. >> good point. two levels to the question
really, which is is that on -- there is this project to build a highway from myanmar through bangladesh and end up in calcutta and it would be a dramatic improvement on what we currently have, but that requires to changes. requires the physical infrastructure, and then something that is actually in a sense easier to achieve but more difficult, which is customs and border, and changes in the way in which those are administered, to enable road transport across the existing border. we have seen a significant improvement already in the last two years. both between india and bangladesh and now between bang la -- and myanmar, and i think -- bangladesh and myanmar and, the think things will good rapidly as movement starts happening. think only pressure for more
easing of the control. it's a huge opportunity, actually. it's a completely neglected -- >> despite the road we drive on. in myanmar, the -- it's right-hand side and we had the steering wheels on the left. i it was strange. >> that's right. >> we'll figure it out. >> hi. i'm ken silverman, head of north america for the ford grub -- group and u.s. centers in india. we bring corporations-universes, nonprofits into flea and set them up to help expand their businesses. my question is for dr. forbes and mrs. kamneni one of the
biggest changes i have seen in india is entrepreneurship. young men and women's family want them to work for the -- and now they want to start their own companies and they a are and you have multi millionaires made in the space of months. what is the impact on indian society and indian families of this work to become entrepreneurs and self-employed. >> i think that the entrepreneurship, you're seeing it now. we have always been a nation of traders. we have the largest number of traders with this thing so everyone who has also shop. of course, government played -- if you see the number of jobs, hardly like 25% is employed in
the organized sector, or in india, and then of course you have the -- then we have the huge trading opportunity, but the exciting part is that the youth are now thinking -- they used to think that going to these other countries that emigrating was be big home for them and their families. now they're actually seeing they can gate lot of it if you open up in banga-lo and it's exciting and capitalists have come to back them. so, that infrastructure that has come together that rahm mentioned is an interesting one, and we'll see more of it all over the world. so not an indian phenomenon but the exciting part is if -- and the contributory part that the u.s. plays is they're actually shaping some of the ideas that -- whether it's the uber
look alikes or the amazon look- alikes that are so huge in india and the other technology changes that will get optimized, but i think that a lot of them are being built hoping that an american company will buy them. maybe that's entrepreneurship. >> if you take the best example of this is the prime minister launched a startup india program last year, at the end of last year. the launch event, asked for applications from potential entrepreneurs, or recent entrepreneurs. they had an auditorium with 3,000 seats. they had 200,000 applications. and so they -- this is the problem. but a very nice problem.
they are still actually going through and you screening the 200,000 applications. set up the whole process of excitement and interest that's been shown around entrepreneurship. now, the challenge is to get these -- some of these startups also focused on manufacturing. the great bulk of them are very much -- i would say the great bulk of them are a combination of service and technology, and getting somehow stronger entrepreneurial movement underway, focuses around manufacturing would be very powerful for the country and that an area where we're trying to help. you don't need to help on the service space at all. it's there. >> let's take the front row here. probably the last one. we have a microphone coming up. use the microphone so everybody in the back can hear you. thank you. >> okay.
my name is -- from -- we do a lot of business with indian r & d companies. and glad to hear about the gst issue because of my frustration. if always see when guy to india to exhibit, to -- we cannot transport, even though i take -- that last time i was there for enhancing the indian ecology system in india, and we had all the thing but i start training at the various colleges because they say cannot go from one state -- >> can you get to the question? >> hope they can benefit from -- remove that barrier. >> i don't know -- >> it would do that.
if you look at -- in the u.s. the interstate commerce act was 1930 something. i'm looking -- when was the interstate commerce act? and it has the same potential. really to really break down artificial barriers between companies. >> let me conclude just by first thanking my co-panelists here. i think to break down the conversation wes heard today as we head towards the prime minister arriving late ared to is both countriesed in to focus on the deeds of the other side rather than just the rhetoric, particularly around campaign time. ray mentioned we need breck down these brackets that sometimes just between area of engagement. positive momentum on one side and such concern and aggressive behavior on the other side and we need to make sure we have more of a wholesome approach to
our engagement. government meetings are help below but business persons who make the investments and do the deals that make the stuff come to fruition so making sure the governments don't forget what about business needs to see. and great to hear this, i promise it wasn't a plug but the important of engaging india's state leaders and not just what mod dibut there's 29 other leaders that you can follow just as closely. i think on this visit we're looking potentially to wrap up some of the deals that were initiated earlier and are within reach before the end of the obama administration, but the other pieces also try to put some anchors on the other side of this eflex united states. how to put tracks in motion of cooperation that would be easy opportunities for the next u.s.ed a norths pick up and continue, because otherwise you may see it starting from scratch. so please join me in thanking the great panel today. >> thank you. thank you.
india's prime minister arrived in washington today and laid a wreath at the tomb of the unknowns as arlington. he'll meet with president obama tomorrow at the white house and address a joint meeting of congress on wednesday. it's part of the prime minister's five-country trip. >> white house press secretary josh earnest took a question about donald trump's remarks concerning the ethnicity of federal judge gonzalo curiel, who was overseeing a class action lawsuit against the nowsch closed trump university. and in a few minutes we'll hear from senate minority leader harry reid, who denounced mr. trump's remarks about judge curiel. senator reid was critical of senator mitch mcconnell for supporting the likely presidential nominee. >> i want to go back and ask you
about -- that donald trump testified -- some of his comments about judges, and i'm wondering if you think those comments are racist. >> well, look, i now there's been plenty comment tear on the presumptive nominees comments and everybody -- the presumptive republican nominee certainly does not seem to strain in prompting people to offer an opinion about his comments. and so -- but i'm goes to resist the urge to do that. let me make one observation about that. some who have weigh inside with their opinions are republicans who serve in the united states senate, and they've had some rather pointed things to say