This is the text of Prime Minister Manmohan Singh's speech inaugurating the Asia Society's 16th Asian Corporate Conference -- whose theme is 'Driving Global Business: India's New Priorities, Asia's New Realities' -- on Saturday, March 18, 2006 in Mumbai.
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Shri SM Krishnaji, Governor of Maharashtra, Shri Vilasrao Deshmukhji, CM of Maharashtra Mr Philips Talbott, Mr Richard Holbrooke, Mr Y C Deveshwar, Ms Vishakha Desai, Delegates to the Conference, Ladies and Gentlemen, I am truly delighted to welcome you all to India! I thank Vishakha Desai and her colleagues for choosing Mumbai as the venue for your Conference this year. We, in India, are delighted that an authority on Indian art and a charming daughter of India has been chosen to head the Asia Society! I am particularly happy to welcome in our midst Ambassador Phillips Talbott, who studied here more than half a century ago, at universities in Aligarh and Santiniketan.
I am also happy to welcome Mr Richard Holbrooke. I believe he too has an old and intimate association with India, going back to his childhood. It is these personal memories of individuals that bind our two great democracies together. It is the warmth of such people-to-people relations and the rewards of business-to-business relations that have taken the relations between our two countries to a new height.
The Asia Society has done commendable work in fostering understanding and cooperation between the USA and Asia in the field of culture, arts, economics and business. I thank organizations like the Asia Society for playing their constructive part in this renewed engagement between our two nations. I congratulate you on the establishment of your regional centre in Mumbai.
I was impressed by the fact that President Bush chose your forum to articulate his views on the Indian sub-continent before his visit here. In his speech President Bush observed: "Some people have said the 21st century will be the Asian century. I believe the 21st century will be freedom's century." Both are true, as the one does not exclude the other. I do not mean that it will be Asia's Century, or indeed any region's century, in terms of the dominance of any single region or power. Those days are gone. In this globalised world, we are all inter-dependent, and the world will become better only when we all work together.
That I believe is what your President meant when he indicated that rather than an Asian century, we should look forward to the dominance of freedom. Ladies and Gentlemen, In a very real sense, Asia too has been finally coming into its own. No part of the world is more full of diversities or so rich in variety. Home to so many of the world's greatest civilisations, to so many of its most gifted peoples, after centuries of subjugation its different countries have again become leading contributors to the evolution of our world. They have their problems, they have their challenges.
They have yet to work together more closely and productively. Doing so on the basis of equality and mutual benefit, they can make for a more harmonious and stable international community as a whole. Cooperation between them and America is no less essential than cooperation between themselves. In that context, the strengthening of ties between India and America is, I believe, a major positive development for Asia as a whole.
The theme of your Conference, "Driving Global Business: India's New Priorities, Asia's New Realities", captures the essence of the change that has taken place since you last met in India in 2001. The reality of Asia's significance in the global economy today cannot be brushed aside. The economic balance is definitely and decisively shifting to Asia as half the growth in world output now comes from Asia. In manufacturing and services, Asia is a globally competitive region. Asia is possibly equally competitive in agriculture if we had fewer distortions in agricultural trade.
In global finance, Asia now funds almost the entire current account deficit of the rest of the world. I believe that the time has now come for financial markets and the global financial architecture take cognizance of this shift in balance and reform the architecture in the best global interest. And cities like Mumbai, with their top class human capital and commercial acumen, have a role in this new global financial architecture as international financial centers.
Ladies and Gentlemen, Just as Asia has changed in the last decade, India too has changed. When we initiated a new turn in our economic policies in 1991, we did not anticipate that within a decade India would be "driving" global business. Our share of global merchandise trade was very low, and continues to be low. Our share of global capital flows was low, and continues to be so. Yet, by 2001 Indian enterprise was making a difference to global business in various sectors.
It began with "Y2K". It may not have been a coincidence that your last meeting in 2001 was in Bangalore. That city symbolized the arrival of India on the global stage in the knowledge economy. Global companies reached out to Indian professionals to secure an edge in a competitive global market. Companies and countries that made good use of Indian talent benefited and remained competitive. Graduating out of Y2K, the Indian information technology industry offered a range of services that have found a growing market worldwide.
Indian enterprise and talent are driving global business in a wide range of sectors across the world. This has given Indian business a new sense of confidence. Gone are the days of the "Bombay Club". There is today more steel in the resolve of Indian enterprise! This new sense of confidence comes from growing success of Indian enterprise in the face of competition in an increasing number of sectors.
Our tariffs have come down, but our share of world trade has gone up! There was a time when finance ministers were pilloried for cutting tariffs, today they are praised for doing so! What has made the difference?
Certainly, our own experience of recording higher growth in a more open economy has helped. But I must also pay tribute to East Asia and South East Asia for boosting our confidence. The success of member countries of ASEAN, of the Republic of Korea and of China, have all shaped our thinking. When we first set the target of bringing India's tariffs down to "ASEAN levels", it was not just an exercise in tariff liberalization but an attempt to benchmark our economic performance against some of the best performers in our neighborhood. And this benchmarking has helped.
I must pay tribute to our East and South-East Asian neighbours for shaping our own thinking on globalisation and the means to deal with it. Some of you might recall that in 1992, our Government launched India's "Look East Policy". This was not merely an external economic policy, it was also a strategic shift in India's vision of the world and India's place in the evolving global economy. Most of all it was about reaching out to our civilizational neighbours in the region. I have always viewed India's destiny as being inter-linked with that of Asia and more so South East Asia. Our trade with Asia has increased exponentially in the past decade. Today the East Asian Community of nations has overtaken Europe and the Americas as the largest bloc among our trading partners.
This is Asia's "new reality" and it is shaping India's "new priorities". Together these will drive "global business". Your Conference could not have been better conceptualized!
What are our new priorities? I believe that India has come to terms with the reality of globalisation. We have concerns about nascent protectionism, particularly in agriculture. We have concerns about the priorities of the World Trade Organisation and the uneven pursuit of the Doha Round agenda. We have concerns about the lack of transparency in the policies of some countries. Yet, we are now ready to face global competition on a level playing field.
India's share in the global flows of goods, services, knowledge and culture has grown in the past decade. Today, our external economic profile is robust and reassuring to investors, at home as well as abroad. Our economy has recorded close to 8% annual growth for two years in a row. We do hope to raise India's annual growth rate to the range of 9 to 10 %. Our optimism is based on the fact that our savings rate is now over 29% of GDP and the investment rate is about 31% of GDP. And with a growing young population and as our economy becomes more hospitable to foreign direct investment, we expect a further increase in the investment rate. In the past year and a half, our policies relating to investment, taxation, foreign trade, FDI, banking, finance and capital markets have evolved to make Indian industry and enterprise more competitive globally. We have launched a massive program for rural and urban renewal which will upgrade our infrastructure. It will generate new incomes and employment, and thereby expand the domestic market. New policies are in place for
enabling public-private partnerships in the modernisation of the roads system, railways, ports, airports, power and the entire urban infrastructure. The telecommunications boom of the past decade has to be sustained for which we are working towards releasing additional spectrum to mobile telephone firms so that they can reach out to the hitherto underserved regions of rural India. Sector specific mega-investment regions with investments of upto US$ 10 billion in each location are being promoted, beginning with chemicals and petrochemicals, and the necessary policy framework for this is being evolved. The entire energy sector including petroleum, natural gas, power and captive coal mining offer exciting opportunities. Investment opportunities exist in all these sectors and I invite investors from across the world to participate in the growth processes we have unleashed.
India is a vibrant marketplace. Our entrepreneurs are investing overseas successfully. Businesses from abroad, including from many Asian countries find India a productive and profitable business destination. The process of engagement in the Asian region has truly taken off. I am confident it will be self-sustaining, enhancing direct contact between peoples and civil societies of the region. We are linking India into a web of partnerships with the countries of the region through free trade and
economic cooperation agreements. We have concluded Free Trade Agreements with SAARC, Singapore, Thailand and ASEAN. We are working on similar arrangements with Japan, China and Korea. This web of engagements may herald an eventual free trade area in Asia covering all major Asian economies and possibly extending to Australia and New Zealand. This Pan Asian FTA could be the future of Asia and will, I am certain, open up new growth avenues for our own economy.
The challenge that faces all of us today is to create and maintain a regional and international environment that enables us to attain and sustain high rates of economic growth. We must create opportunities for entrepreneurship to flourish not only locally, but also regionally and globally. Economic activity cannot be confined to national borders; it must be channeled to fuel growth in each other's countries. Regional trading arrangements have become important building blocks of multilateralism in the increasingly globalized world that we live in.
Ladies and Gentlemen, I do recognize, however, that we have some work to do at home to make our economy more competitive and to facilitate faster economic growth. Our Government is committed to creating world class infrastructure, to investing in building human capabilities and to stepping up the rate of growth of investment, while at the same time building a caring, inclusive society.
To guide us in attaining these goals I invited one of Mumbai's most highly regarded business leaders, my friend Shri Ratan Tata, to chair the Investment Commission. The group recently submitted its first report and our Government will implement many of the ideas in it. Mr Tata and his colleagues have estimated that to sustain an annual growth rate of 8% over the next five years, the economy would require investment of over $1.5 trillion. The Commission has estimated that this should include FDI of over $70 billion.
I fully agree with the overall thrust of the Investment Commission's recommendations. We have to reduce the transaction cost of doing business in India. We have to bring our infrastructure in line with global standards. We have to ensure global best practices in our regulatory institutions and systems. We need to simplify regulatory and approval procedures. We are committed to doing so. Today morning, I launched an e-governance initiative of the Ministry of Company Affairs which automates the statutory record filing and record keeping functions of a key ministry. This would benefit business firms. We need to do more of the same. I have often said that our people have come to expect that they are entitled to world class facilities, world class services and world class infrastructure. It is incumbent on us in Government to fulfill these expectations.
Power is one area where critical gaps persist. We have taken many new initiatives recently to facilitate public-private partnerships in the energy sector. Many of you will be relieved to know that we have finally resolved all issues related to the Dabhol power project in Maharashtra, which will restart this year. We are working on mega power projects to bridge the demand-supply gap. Our recent agreement with the United States should open up new avenues for investment in civilian nuclear power, in non-conventional sources of power, and in clean coal technologies.
Availability of cheap, environment friendly, good quality power is an essential ingredient of growth and I am confident that with the access to best technologies in the world, we will achieve our goals. I recognize that there has been a relative neglect of manufacturing in India in recent years. Mumbai was the manufacturing capital of India. To revive manufacturing industry, to make it globally competitive, and to make it the driving force for employment and economic growth, we have unveiled a ten year National Manufacturing Initiative. Emphasis will be placed on labour-intensive sectors such as textiles & garments, leather & leather goods, food processing, IT hardware & electronics and auto components.
Focused attention will be given to the growth of our dynamic services sector including software, outsourcing, tourism, education and healthcare so as to create large employment opportunities. At the same time, we are reforming the institutional architecture within which enterprises function. We are trying to reform the legal system to reduce arrears and improve the speed of the justice delivery system. We are examining the possibility of having alternate dispute resolution mechanisms,
particularly for commercial disputes. The Knowledge Commission is working on strengthening the base of the knowledge economy through improved higher education systems. We have taken the first steps by beginning work on setting up three new Indian Institutes of Science. I do believe that if we create a more liberal environment for enterprise, the Indian genius will respond more handsomely to new opportunities for employment and income generation.
Ladies and Gentlemen, I urge business leaders in Mumbai to provide the leadership we need here to give a new lease of life to Mumbai. I am convinced that a historic opportunity for the revamping of Mumbai presents itself before us today. Mumbai can emerge as a new financial capital of Asia, and be the bridge between Asia and the West in the world of finance.
A proposal to make Mumbai a Regional Financial Centre is already under active consideration. Our economic reforms have accelerated growth, enhanced stability and strengthened both external and financial sectors. Our trade as well as financial sectors are already considerably integrated with the global economy and the trend is irreversible. Mumbai, with all its inherent advantages in terms of human capital and commercial acumen, can be positioned as a viable Regional Financial Centre. Given the changes that have taken place over the last two decades, there is merit in moving towards fuller capital account convertibility within a transparent framework. Our own position, internally and externally, has become far more comfortable. I have requested the Finance Minister and the Reserve Bank to revisit the subject and come out with a roadmap on capital account convertibility based on current realities. This will facilitate the transformation of Mumbai into not only a Regional but also a Global
Financial Centre. There are multiple options that are possible for such a centre, including as an SEZ, and I am confident that we can make steady but firm progress in that direction.
Ladies and Gentlemen, I am happy to learn that the Asia Society will open an India Center here in Mumbai. Mumbai is one of our most vibrant and globalised cities, pulsating with creativity and enterprise. I am sure that the Asia Society will find Mumbai a hospitable city, and truly a "Gateway to India". Mumbai needs investment in urban renewal. Mumbai needs a world class airport. Mumbai needs better public transport. Mumbai must unlock the potential of its under-utilised assets, especially land.
When I spoke of turning Mumbai into a Shanghai, many wondered what I had in mind. It is not my intention to draw a road map for Mumbai's future. But I do believe that Mumbai can learn from Shanghai's experience in reinventing itself; in rebuilding itself; in rediscovering itself. Mumbai is one of our most cosmopolitan cities. The Mumbaikar is a truly national Indian. I salute the spirit of Mumbai. I urge every Mumbaikar to transform this city from being a Gateway to India to becoming a Gateway to Asia! Mumbai has the human skills, the connectivity and the advantage of location to become the financial capital of Asia. It will get the infrastructure it rightfully deserves to realize this dream. I hope the Asia Society will be one of the catalysts in this process. I wish your Conference all success.