Union Commerce and Industry Minister Arun Jaitley said that India's economic reforms programme is on track and the country aims to join the league of developed nations by 2020.
He was speaking at the Asia Society on 'India-US trade and economic relations' in New York.
Jaitley made a strong pitch for India's emerging economic strength, addressing a gathering that included former US ambassador to India Frank Wisner, high-powered delegations from Federation of Indian Chambers of Commerce and Industry and the Confederation of Indian Industry, and top US officials.
He described India as the leader of the developing world with a fast-paced reforms plan, but also cautioned that being a democracy, one of the constraints in implementing reforms in India was the need for popular sanction of a large mass of people.
"A large number of Indians have not really recognised what the impact of reforms on each one of them will be."
"In addition, the huge knowledge resource India is creating is causing ripples in the rest of the world," he said, calling it the core competence of India. "Be it healthcare, engineering or management, we are now at surplus capacity with the number of engineering colleges going into figures."
Huge potential for further cooperation
Later, addressing an impressive gathering in Washington, he said that although there are large areas of 'convergence and divergence' between the India and US, both the countries have underlined that there is a vast potential for further cooperation in the fields of commerce, industry, investment and services and the problems facing both sides as they try to realise it.
"There are between the two countries large areas of convergence as well as divergence but they can work together for better relations with one representing the world's largest economy and the other the economy of one-sixth of the world's population whose gross domestic product in purchasing power parity terms is the world's fourth largest," Jaitley said.
He was speaking during the relaunch of The US-India Commercial Dialogue, an institutional arrangement established by President Clinton and Prime Minister Atal Bihari Vajpayee, during Clinton's memorable Delhi visit, by the US-India Business Council, the FICCI and the CII.
The Dialogue, he said, enables both to understand each other's positions better and there is need to increase the frequency of these dialogues.
Trade volumes can increase
Jaitley said he has just come back from a very fruitful session with US Secretary of Commerce Don Evans. It enabled them to further appreciate each other's positions. Both he and the US Secretary feel that even though the US is India's largest trading partner, their volumes of trade could be much higher.
Jaitley pointed out that the nature of the trade between the two countries has changed. Not only does India expect investments from the US to enter India, but investment by Indian businesses in the US is also now taking place.
IT companies from India have a very sizeable presence in the US. Indian pharmaceutical companies have made very important acquisitions in the United States. Indian personnel transmit their services to the US electronically.
India, a vast resource of knowledge
Today, said Jaitley: "We have reached a situation where India has developed a vast resource of knowledge. Our human resources in terms of knowledge of various kinds are indeed very large. The strength of Indian professionals is going to increase year after year and this is indeed enabling India to make its presence felt in various economies," he added.
India's investment environment, said Jaitley, is indeed very friendly and her market is huge. India now has an Intellectual Property Rights regime that is internationally compatible. India has large resources of knowledge personnel and both skilled and unskilled labour.
The spirit of competitiveness has gone into Indian businesses, in trade, in manufacturing and in services. In fact, this was responsible for last year's increase in India's exports by 18 per cent, despite a slowdown in the global economy, he said.
Over the last decade, India has consistently managed respectable annual growth rates averaging 6 per cent. Indian society has started finding the benefits of reforming the regime of controls. India is, therefore, engaged with both the US and other large economies in increasing trade, he added.
Some sensitive concerns
However, Jaitley said that there are several areas in which the economies of developing countries like India have sensitive concerns.
For instance, almost 650 million people in India depend on agriculture. Therefore, when this population competes with highly subsidised agricultural economies (in developed countries), it does create several constraints. "Therefore," said Jaitley, "our positions at multilateral forums are legitimately conditioned by our concern for this segment of the population."
Jaitley stressed that the two largest democracies of the world have common objectives and a common roadmap in terms of fighting terrorism and eradication of poverty.
Both the countries can draw out strategies for understanding each other's positions both at the government and industry level and for establishing a better relationship between the two countries, Jaitley said.
Bodman laments low Indo-US trade
Deputy Secretary of Commerce Bodman -- speaking at the relaunch of The US-India Commercial Dialogue -- recalled that last year, he lamented the very low level of US exports to India and the low level of US direct investment in India.
This year, however, he could report some good things - increase in US exports by 9 per cent. US direct investment has also increased to a record net position of $1.7 billion.
Indian exports to the US have also increased. These positive developments reflect the recent improvement in India's industrial production, its investment in infrastructure such as roads and ports, lower interest rates as well as the stabilisation and strengthening of the rupee.
However, the 9 per cent increase in US exports amounts to just $340 million. That, he said, "is a little drop in the bucket. Actually, in a country of over a billion people, $1.7 billion in direct investment is not just a drop in the bucket; it is a drop in the ocean."
Although India and the United States have inched forward and the figures are encouraging, the percentage increases are from a very low base, he said.
'India must be a more significant partner of US'
India's immense potential in the global economy, said Bodman, is very far from being realised. India must be a more significant commercial partner of the United States.
The business communities on both sides are missing opportunities.
India, he said, simply must continue to move forward with economic reforms. Considerable progress has been made recently, he acknowledged. Parliament has passed many reforms in banking, bankruptcy and equity markets.
More recently, India has reduced tariffs. It has also gone some way to meeting US concerns regarding tariff and customs valuation for certain products of interest to US exports. "We are very grateful for that," said Bodman.
At the same time, he said that much more needs to be done including further tariff reductions, increases in foreign direct investment limits, implementation of the value-added tax, improved intellectual property protection as well as implementation of the recently passed Electricity Reform Bill.
That is a very large agenda but the fulfillment of it would improve conditions for commercial partnership.
Secretary Evans and he looked forward to the first full meeting of the group on July two, said Bodman. Both countries stand to benefit enormously from this initiative, "and we will work with both the Indian government and the private sector to make this a success. Our bilateral relations really benefit both from active cooperation."
The positions India takes in the Doha negotiations can help the developing world attain greater openness and prosperity or, alternatively can discourage liberalisation and contribute to countless people of the world behind left behind, he said.
India, he said, appears to be moving in the direction of greater openness and integration into the world economy. Why not take advantage of the World Trade Organisation negotiations, lock in these steps and encourage liberalisation by all trading partners?
This would have significant benefits principally for domestic consumers but also would lead to significant increases in exports.
It would also help spur economic growth and development around the world, something where India can play a leadership role. India and developing countries in general will benefit from a very ambitious and fruitful round of negotiations, Bodman added.
"As we prepare for the ministerial round in Cancun (Mexico) the mid-point in the negotiations," he said, "I would encourage India to take a fresh look at what approaches can benefit it the most in these negotiations."
Bodman said that it is in India's interest to support the most ambitious proposals that are currently on the table.
"I see a great deal of potential for India as a country," said Bodman.
"Relations between our two great democracies have never been better. It is time our commercial ties catch up with the rest of our relationship. That is really a challenge for all of us. US and Indian businesses must work together because the possibilities for growth in India are really enormous. I will pledge to you that we in the commerce department will do everything we can to help meet that challenge."
Additional inputs: PTI