Address by

David C. Mulford

U.S. Ambassador to India

to the Business Development Summit

Mumbai, India

November 29, 2006

Good morning. Minister of State Kumar, Commerce Secretary of the
Government of India Pillai, Undersecretary of Commerce of the United
States Lavin, President of FICCI Poddar, and President of CII
Sheshasayee, ladies and gentlemen, I welcome you on your visit to
Mumbai - many, I understand, for the first time. Mumbai has been a
central trading hub for centuries, yet it is still a magnet for growing
trade and commerce. It is also India\'s financial center and will emerge
over time as an important global financial market. America\'s commercial
ties with India go back for centuries as well; starting with George
Washington\'s nomination of Benjamin Joy as Consul in Calcutta in 1792.

I applaud the number of small and medium sized US companies that have
come to see for themselves the economic promise that India holds.

During your visit, especially during the next few days, you are sure to
hear much about that promise, as well as the challenges that come with
it. While I have this time with you, I wanted to share my perspective on
what it means to be in India right now and the challenges and
opportunities that await you. In doing so, I want to step back a bit
from the day to day realities in front of you, and comment on the
political economy that shapes those realities.

My theme is that it is the right time to be in India. We have gathered
here as another new high point in the Indo-US relationship is achieved.
Two weeks ago, the Senate\--with striking bipartisan
support\--overwhelmingly passed the US-India Civilian Nuclear Agreement
legislation. The debate in both the Senate and the House brought out the
best in our legislators as they captured the shared awareness of
Americans that India has become a critically important strategic partner
of the US and is a proponent of peace and stability in the world.

It is the right time to be in India on the eve of the creation of a
world industry in civilian nuclear energy production, where India\'s
talented scientists and engineers will work with Americans and others to
develop the energy base needed to literally power this country forward
in the 21st century. Roughly 30 of you here represent firms that are
poised to bring state-of-the art nuclear technology and commercial
know-how to this sector.

It is the right time to be in India \-- to share in the blossoming of
our two countries\' relationship and the transformation of India\'s
economy from closed and protected to one that seeks to meet the rest of
the world as consumer, producer, and investor. This has been
impressively underlined these last six months when for the first time
and despite rising foreign investment into India, acquisitions by Indian
firms outside India have outpaced incoming flows. This marks, in my
view, the beginning of two-way investment between our countries that
will supplement our rapidly growing two-way trade.

You may have heard about the World Bank\'s global rankings on the
difficulties of doing business around the world. India often stands in
the middle or near the bottom of these business league tables. These
indicators are not without meaning, but they are lagging indicators and
India is changing.

For decades, government in India had the responsibility of deciding and
shaping the growth model for India\'s economy, trying to ensure that
India\'s poor shared in any rising tide. But the unintended consequence
of what became known as the license raj was to repress entrepreneurship
and severely limit the opportunities for India\'s poor to better their
lives.

Now, these past 15 years, there are increasing adherents across India\'s
vibrant political spectrum who understand that growing the pie is as
important as dividing up the pie and that the private sector has a
decisive role to play in inclusive economic growth. That realization has
enabled foreign companies entree to many areas of India\'s economy.

But the respective roles of India\'s public and private sectors are
still being negotiated. While the private sector\'s potential is now
widely recognized, there is still an urge to protect poorer India
against the world. The debate goes on: how much should the private
sector\--especially foreign private companies\-- be trusted to add value
to India\'s diverse society? How much foreign participation should be
allowed in this emerging economy and what should be the rules of entry?

And so hurdles and problems exist\--from complicated tax administration
laws to labyrinthine bureaucratic processes\--and these are not always
transparent at the beginning of one\'s foray into India.

Some of you will be going on to other cities, which I highly encourage,
so that you may see the India outside Delhi and Mumbai. India is a
federal union of 29 states and 6 union territories. It is important to
understand that economic growth has been uneven across these states and
territories, with varying degrees of both good governance and reforms.

These challenges mean that business engagement with India is not a
journey for the faint-hearted or for those who expect overnight success.
Success in India demands long-term commitment and the patience, the
vision, and a strategy to succeed. But the journey will be rewarding for
those who make the effort and especially for those who approach India as
a locus for future-looking global business.

A critical mass of India\'s own private sector has already decided it
can play a vital role in the transforming public/private relationship.
India Inc., instead of spending its entrepreneurial energy exploiting or
avoiding the license raj stranglehold of yesteryear, is re-channeling
its innovative spirit into the development of sophisticated
technologies, new products, new markets, and new partners \-- driving
India\'s rising economic growth.

This newly focused entrepreneurialism first gained world attention in
India\'s renowned IT sector, but is increasingly seen in the
manufacturing sector, in pharmaceuticals and life sciences, and in
services like telecom and tourism, which are all experiencing growth
records.

It is also apparent in Bombay\'s surging stock exchange, whose benchmark
index has risen from 4500 in early 2004 to a recent high of 13700.
Foreign investors increasingly play a role in this growth, but Indians
still provide the majority of investment, demonstrating homegrown
confidence in India Inc\'s trajectory.

At the same time, economic growth has boosted per capita income from
\$470 in 2000 to \$714 in 2005, a 55 percent increase which has
multiplied purchasing power across the country. This in turn has created
world-class markets from the largest number of annual mobile phone sales
in the world to potential consumer markets in rural India where more
than 700 million people live.

Meanwhile, India\'s government has identified the need through both
public and private investment to focus on 3 critical areas\--energy,
infrastructure, and agriculture. These are compelling fields for
collaboration between American and Indian firms. India\'s leadership has
recognized that the scale of these needs is enormous\--estimating
infrastructure investment requirements at more than \$300 billion over
the next five years\--and they understand that all three areas must have
private sector participation to meet the challenge.

Growing economic ties between the US and India reflect more than simply
the economic opportunities available to American companies in the Indian
market. There is also a keen understanding of the benefits that close
collaboration with globally competitive US firms can bring in world
markets.

American businesses, unfettered by a legacy of state micromanagement,
begin and grow in an environment of heightened competition that demands
strong management, technology skills, and deep understanding of customer
service and of changing markets. Many Indian companies recognize these
business assets and seek out partnerships that help them mature as
globally dynamic firms.

American sectoral expertise from clean coal technology to power
transmission to dynamic and responsive capital markets can also play a
role in developing the 21st century infrastructure India needs to
sustain its growth momentum and bring growth to all corners of India.

The CEO Forum\--formed last year by President Bush and Prime Minister
Singh with 20 CEOs from prominent Indian and American companies\--is one
forum that enables and amplifies the collaboration that American and
Indian companies can achieve together. The Forum is the forerunner to
both new companies coming in and companies already in India expanding
their investment. The focus is on practical approaches, lessons learned,
and best practices to navigate the still transforming Indian state and
economy that I described earlier.

Just as the Forum brought Indian and American CEOs together, I urge that
all of you use this historic conference to do deals, form partnerships,
and profit from the opportunity for frank dialogue with Indian
government officials. You will need a strategy\--a long term
view\--patience and persistence. But one of the world\'s great markets
is here.

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