U.S-India Economic Relations

CARLA HILLS: Welcome. I'm so glad to see all of you here. This is a terrific meeting. Let me start with the fact that it is on the record. We have press in the room, in true Council fashion. And I would ask each of you to turn off -- that is, off, not on vibrate, but off -- anything that is electronic, because if it is vibrating, it will interfere with the electronical system and the hearing system.

And this evening, because we have such an honored guest, we are joined by the honorable Rahul Khullar, who is India's secretary of commerce, and Arun Singh, who is the deputy chief of mission. And we have a number of members of the Indian business community here with us today, led by Mr. Mittal, who is seated here, from the Federation of Indian Chamber of Commerce and Industry.

And they're here, as all of you are, because we're privileged to have Minister Sharma, who is India's minister of commerce and industry, with us. He's really a very special government official. He's been trained as a lawyer, but he's very, very well known in Indian politics. He founded the student wing of the Congress Party, and he was elected to Parliament at the ripe old age of 31.

For six years, he served as the chief spokesman for his party, and he served as minister of state for both the external affairs and for information and broadcasting. But he also has a considerable amount of international experience, having served as a member of delegations by the Indian government to over 50 countries. He either led or was a member of those. And he's been recognized for his personal commitment against apartheid, convening major conferences in Delhi against apartheid when he served as president of India's Youth Congress.

His appointment as trade minister followed last year's stunning victory by the Congress Party. And I say stunning because it was the first government in over 40 years to be re-elected after a full term and in the midst of a global financial crisis. He is said to have played a strategic role in planning the election campaign.

Now, the minister has agreed to speak about 10 minutes from the podium, after which he will take questions from the floor and will engage each of you. So join me in welcoming Minister Sharma to the podium to address us. (Applause.)

COMMERCE AND INDUSTRY MINISTER ANAND SHARMA: Thank you, Carla Hills, Commerce Secretary of India Rahul Khullar, Deputy Chief of Mission Arun Singh, the president of the Federation of Indian Chambers of Commerce and Industry, Rahul Mittal, to recognize the president of CII, Mr. Hari Bhartia, for my ambassadors, captains of industry, senior officials, friends.

There are many I recognize in this room for whom I am not a stranger and they are not strangers to me. And they have been hearing us for a long time on a wide range of subjects.

I'm particularly delighted to be here at the Council for Foreign Relations, which has played over the years an important role in informed debate on matters pertaining to foreign affairs, diplomacy, but also other subjects which do impact societies and also decision-making processes in the country.

And it's my firm belief that discussions on matters which are of critical import to the masses in any society and democracy are important, particularly for countries like the United States of America and India, countries which are playing considerably an important role in the global affairs, U.S. being the world leader, the leading economy of the world. And India, as the largest democracy on this planet, as an emerging economy, has its own role to play.

Recognizing that, I find here a platform, a platform to share our views on the evolving economic situation in the world, India's own engagement, and also what is happening in our strategic partnership between New Delhi and Washington as we are preparing, both our governments, for the forthcoming visit, the first visit of the U.S. president, Barack Obama, in six weeks' time to India.

Last time, when I was speaking in Washington at the Peterson Institute -- and Carla Hills, you were there -- it was in a painful backdrop of the economic crisis that has engulfed the world. There was uncertainty. There was anxiety.

This year it's a different story. How different is difficult to say. But, yes, the first quarter of the first half of 2010 has brought some cheer to the economies, to the governments, to the industry. We hope that we are emerging, the global economy, from one of the worst crises that had affected countries across the globe in the last seven decades.

And that was a period when we saw the confidence dwindling. Capital flows were frozen for a considerable period of time. Even those who had the capacity to respond were slow or tentative in responding because of the enormity of the crisis. The investments also nose-dived from what was $1.9 trillion FDI in the world. It came down to $1 trillion.

Now, these are not mere numbers. There are many dimensions to this crisis as to what happened to the small and vulnerable economies, what happened to the larger issues we were grappling of human development, the Millennium Development goals, the issues of food security, energy security, health security, the challenge of pandemics. Everything was relegated to the background, and the social dimension of job losses -- 59 million, one figure says -- it could be much more.

Economic recovery has taken place, but not a robust recovery. It's uneven. It lacks uniformity, like the fall itself. We in India were also affected. I was speaking yesterday in Chicago, telling them that, having grown consistently for over 9 percent for five years, we were also pulled down to 6.7 percent. We have come back to high-growth trajectory. Hopefully this year we'll go to eight and a half, 9 percent.

We have also noticed robust recovery the last quarter in the United States of America. It is important for the world that U.S. grows and jobs return. We are strategic partners engaged in all those sectors, which can be described as sensitive and strategic.

And therefore, for us, this engagement between two largest democracies has a special meaning. But it is not restricted only to United States of America and India. What we do together also impacts not only our extended neighborhoods, but the geopolitics and the global economic discourse. And that we have to bear in mind.

Things are changing in the world. There's a major shift which we have seen, particularly with regard to the development of nations and economies. And that shift was very sharply underscored during the period of the economic crisis. There's a new fulcrum of economic stability in the world which will be there very soon. In the countries of the south -- (inaudible) -- Asia in particular playing a major role.

In three years, the economies of U.S., EU and Asia will be similar-sized, each contributing 25 percent to the global GDP. The next one decade, earlier than that, of the five major economies of the world, three will be from Asia. India will be one of those three.

So in that context, we have to view of a bilateral partnership. There are strengths which America has which are recognized and respected world over -- its resources, its institutions, its capacity to develop technologies, to invest in innovation.

And that's where I feel that there are synergies, given the demographic profile of both our countries, India's own commitment to institution-building, developing its human resources, and also our ability, particularly of Indian scientists, leaders in the field of knowledge sector, to be good partners in ensuring that we can absorb access, the best of technologies that are there in the world, and also helping inventing new ones. It's not only for the economic development, but for the betterment of humankind, whether it's in the health sector, the (generics ?). And its range is a huge one. I need not go into details.

We see this as one area where the bilateral engagement has been a bit deficient, and that's an understatement. We have brought strong investments from both our countries, from India into America and from U.S. into India. U.S. is the third-largest investor in the Indian economy. But we are one of the first three favored destinations for FDIs. We remained one even during the economic downturn. And this is bound to improve.

It's not a question of ranking. It's a question of what India will be able to absorb as we continue to grow at a fast pace, the second-fastest-growing economy in the world. We'll be absorbing close to $1.7 trillion only in infrastructure building in the next 10 years.

I see many of the U.S. corporate leaders who have met me in my Delhi office and nodding heads because they know what the potential is. The opportunities are limitless. There's no restriction on opportunities. And there are other fields, whether it's agriculture, the manufacturing sector. But the high end of technology is important.

The U.S. has been trading in high technology, to the extent of 600 billion U.S. dollars. There's $10 billion of high-technology trade with India. That is what must be corrected. We have to be partners in manufacturing these technologies, but also in investing in new technologies, particularly innovation.

Like the last two decades, the world is witnessing yet another wave of technologies, and which is bound to happen as we continue to grapple with the present challenges and the new ones present themselves. It's not the complaint of the present generation of governments and leaders in diverse fields.

That has been the story ever since humankind benefited from the technologies, particularly those which came with the industrial age. That created a different world. And the last wave has bridged the divide, to some extent. (Inaudible) -- professionals, particularly in the information technology and science and biosciences, biotechnologies, have made their own contribution, which needs to be put in a proper perspective.

I was talking to the media just before I drove here, and there were many questions which were raised as to what has been discussed. You know, and we do not mind the media to be inquisitive. And they have to be, because they have to disseminate information, as long as they do it without adding their own interpretation. But our interpretation, that's always helpful.

But, yes, the questions were many, particularly about the services sector and the technology sector. What must be recognized, that we live in a world which is very much different from the world which we have read about the first half of the last century, and it changed dramatically post-Second World War when the new technologies came, and those countries which were the beneficiaries of the first flash of technologies continued to benefit.

But in the last two decades, it is the professionals, the scientists from the emerging economies, including India, who have made their own contribution. I am referring to the IT sector and other related services sectors.

What needs to be fully recognized, and I find that it is not, that it's a two-way process when countries are engaged in partnership, when we invest in each other's economies, each other's institutions. It's the Indian industry which has sustained, saved or created a very large number of jobs in the United States of America and in Europe during a critical period. I'm talking of 2008-2009. And those figures are in public domain.

Last year, you will recall, when I was speaking at the Peterson Institute last March, we released a study -- it was done by the CII in partnership with the Peterson Institute -- which clearly demonstrated that over 300,000 jobs were created in less than five years by the Indian investments, Indian industry, and 250,000 of those jobs were in IT sector. We also -- (inaudible) -- of other investments which have been created through the mergers and acquisitions, the jobs which have been saved or sustained, another 100,000.

Perhaps this aspect has not been fully brought about. This is what I feel is when we look at some of the actions with regard to the Indian IT professionals, who have to be respected for what they have achieved in a country which struggled with monumental developmental challenges after its independence, and independence which came following centuries of subjugation and exploitation.

So we are very proud of the sons and daughters who have been able to achieve this and make their own contribution in the development of other countries. So it's not as if they are depriving people anywhere, including in this country. They are assisting in their own manner, and so are our investors.

We have one Indian company -- Rahul Mittal is sitting right in front -- the Airtel. They have expanded. They have -- (inaudible) -- to other continents. But recently they placed an order of three and a half billion dollars in IBM. This should be something, I feel, adequately communicated to our wise brothers and sisters who populate the U.S. Congress, that it is the other way also they need to look at to put things in a proper perspective and take a fair and objective view of the matter.

I have been to distant corners of the world. We have seen Indian -- the so-called BPOs. But they are not operating from Bangalore. I have seen them operating from Quito in Ecuador, seen them operating in Guatemala. I've seen them operating in African continent.

And I always ask, as is my nature, "How many employees do you have? How many of the local employees?" because I feel that our businesses, both public and private sector, have to follow the right ethics, right ethics, particularly with regard to the countries which need that support in Africa and South America, in the Caribbean, that even if they do not have people who are able to work, they should make them employable by empowering them. And that's exactly what they have been doing.

Both our countries have expectations of our people. There are times when leaders are under pressure -- economic crisis, job losses -- to test the mettle of the leaders, the governments. And the governments have to respond to the domestic concerns, I understand, to the popular concerns.

But I have said so, and I repeat here again, there is a natural tendency to look inwards. That has happened in the past. And the lessons learned have been very painful. Protectionism is regressive. It's counterproductive. Those who have to provide leadership should avoid that.

We stepped out last year to engage more with the world. You were talking to me about the WTO and Doha, and I'm sure that we will have occasion to refer to that. But we did consciously enter into comprehensive economic partnership agreements, the free-trade agreements, be it Korea or ASEAN, and fast-tracked our negotiations with many other countries. The commerce secretary knows that what we have done in recent months and before the end of the year, it will hopefully bring to closure some of their agreements.

Difficult times mean that the time is to dismantle the barriers, not to erect new ones. By enhancing global commerce, we will be able to ensure an early and sustainable recovery. By not doing so, we will have to reflect one day as to why we did not.

I hope the forthcoming visit of President Obama, who is much loved and respected in my country, for obvious reasons -- a country which shares the same values of democracy, of liberty, of human rights and justice, and a country which has led to its own freedom with the values, the ideals of none other than Mahatma Gandhi, whose values influenced many movements in different corners of this planet, including the civil-rights movement -- and therefore, we hope his visit to India will open new pathways of cooperation and consolidate the partnership between the two great democracies. That's India and America.

Thank you. (Applause.)

HILLS: While Minister Sharma is getting his microphone, let me just pose the first question slowly so he can think about it.

You mentioned the two largest democracies working together, the partnership. And I think that we'd be interested in your views as to whether India and the United States could partner in moving forward, both the Doha Round through the G-20, but also in dealing with some of the issues you raised. The imbalance in the global economy is sharp. And unless we correct it, we're likely to have another crisis.

SHARMA: Yes.

HILLS: And the question is, how do we bring the nine members of Asia together with the 11 members outside of Asia? How do we bring China and the United States, one who has too large a deficit and the other that has too large a surplus? Talk a little bit about how India and the United States might work together to both open markets, which you've addressed, through Doha, bringing services in --

SHARMA: Yes.

HILLS: -- and also dealing with the background that makes it difficult to open markets; that is, this global imbalance.

SHARMA: We can, in my view. The ongoing negotiations in the WTO have seen much human energy and time having been expanded as -- (inaudible) -- nine years. It's high time that it is taken to its rightful conclusion.

This round is dedicated to development, to the centrality of the developmental dimension, and multilateralism has to be borne in mind. At the same time, if it concludes at an early date, what kind of conclusion it will be, I know that there cannot be any multilateral agreement which can meet the expectations and aspirations of each country which is involved in those negotiations. We have more than 150 countries involved.

Now, each one have brought to the table what their issues or expectations are. And in negotiations, as we know, it's important to find the middle ground where everybody is comfortable to stand upon. There are no perfect solutions to such negotiations. So we have to accept, in the spirit of accommodation and give and take, bearing in mind that the poorer economies, the LDCs, must get better access.

But once a rule-based multilateral trade regime is put in place which is fair and balanced, at least which is perceived to be fair and balanced by all, it'll give a great -- (inaudible) -- to the global commerce.

I know that there is now -- it's pretty fashionable to quantify -- I've heard it many times -- as to how much America will gain in the first year, how much India will gave or what China's gains would be. As leading big economies, we should be looking at the big picture. Gains will be there, but gains will keep on changing. Figures are never frozen. If what was quantified as the gains for A country of B country last year, this year the economic discourse is different than what it was in 2008 or 2009. Therefore, the need is to give it a push.

It's true that the key interlocutors have to play a role, both from the developed countries and the emerging economies. India very rightly identified the countries. And you referred to G-20 as to what G-20 can do. G-20 has emerged as an inclusive platform, a representative platform of the current global economic realities.

And it's good that it has happened, because the earlier platforms or the initiatives of G-8 plus five, G-8 plus-plus, was more patronizing and non-representative, because we could not have -- both the political and economic architecture could not have remained frozen, the order that emerged after the Second World War.

Things have changed. And G-20, therefore, is inclusive. And the coordinated responses of the G-20 countries, the intervention by governments, the stimulus packages, incentives which were given, helped in stabilizing the global economy and also guided the recovery. So that cooperation must remain.

Now, G-20, some have said repeatedly, directed us, the ministers -- (inaudible) -- commerce secretary said he will ask the chief negotiators, "You go and resume." The mandates have to be very clear. G-20 summit in Pittsburgh talked about concluding it in 2010, and that was not reaffirmed as forcefully in Toronto. But what has been said by the G-20 leaders -- and we are party to that declaration, and my prime minister has been consistently of this view -- Dr. Manmohan Singh, besides being the prime minister, is an eminent economist -- that this is the need of the hour to conclude the WTO negotiations.

Now, we have been asked to report in Seoul the next G-20 summit. But the fact is that after Toronto, but for some meetings in the margins which the key ministers have had, there has not been any structured interaction. So I am going to go from here to Peterson Institute, where they have some of those who will participate in tomorrow's global services summit present there.

I have been raising this question recently with the Chinese minister, Chen Deming, and with Ambassador Ron Kirk, with the EU trade commissioner, and also with our key coalition partners of the developing countries coalition in the WTO.

I think the intent to run the final lap has to be very loudly declared by the G-20. If that happens and every country which is giving -- subscribing to the declaration also gives the requisite mandate to the chief negotiators, we will reach there.

HILLS: You say if it happens. What odds do you give it?

SHARMA: If it happens, then it should be -- I will not put a date, but I feel that a large number of issues, agreement has been reached. And the tendency to reopen the closed issue should not be there. But that will be unraveling the process itself. And if there remain issues, irrespective of whether those issues are -- (inaudible) -- issues, whether those are big issues, the remaining gaps may be 20 percent to 25 percent.

Those gaps must be closed. And they should be finished as a single undertaking. It's agreement on agriculture, on services, on NAMA, on investment. It should be a single undertaking, not piecemeal that we will do this now, then we will start struggling over the second. Those additions have been there, and I'm personally not in favor because I don't think that is demonstrative of confidence that we have in ourselves or commitment to the process.

HILLS: Let me open it up and ask the audience.

Yes. State your name and affiliation so that the minister knows who's talking to him.

QUESTIONER: Steve Schwebel, arbitrator.

At the time of independence, India's population was on the order of 400 million, and today it exceeds a billion. What, if anything, is being done to constrain the growth of India's population?

SHARMA: Steve, you're right that we were maybe 350 million or a little less than that at the time of independence and India's partition. Population has grown, and we are 1.1 billion, if not a bit more, because the census is on. So we will know the final numbers in a few months' time.

I think steps are there -- public awareness, health campaigns in rural areas. And it's not that there has been an exponential or explosive growth in recent years. As incomes and standards of living are moving up in urban areas, there is one disturbing trend too. Even if we are 1.1 billion people, the younger people, if both of them happen to be working, they're not subscribing to raising families. It has happened in Europe. It has happened elsewhere. So this is a flip side to it also, that if you go overboard, overzealous in pushing for controlling, China has done it. A few years down the line, they may not be celebrating that, because this country will know better.

You are also a populous country, but you are much bigger in area as compared to India. But one of the strengths that the United States of America will continue to have is the demographic profile and the demographic dividend. I know, growing up, in my college days, university days, when we were told that India produces one Australia in a year, and this is the bane or the curse. Today I don't look at it from that perspective.

We are a young nation-state. But over two thirds of our people are young. Today, unlike in 1947 or '50s, they have access or increasing access to the tools of empowerment, to education. Many of them may not go to universities; will get trained in skills. We will have, I was mentioning in Chicago yesterday, in 10 years from now, 200 million Indians joining the workforce.

In the global context, these Indian assets are global assets, because there is a projected contraction of the skilled workforce in the world. Many of the countries which have boasted of manufacturing as their strength will not be able to sustain that because they will not have the young men and women to sustain it.

Therefore, to my mind, in the coming decades they will prove to be a strength. Yes, there will be a time which will happen, as life spans have increased, and India will also have a sizable aging population. And we'll grapple with the challenge of having small number of young people. So I think, as of now, it is under control. We'll be able to manage.

HILLS: Question? Yes, in the back.

QUESTIONER: Hi. Elina Teplinsky. I'm an attorney at Pillsbury Winthrop Shaw Pittman here in Washington, D.C.

And my question concerns India-U.S. nuclear cooperation. As I'm sure everyone in this room knows, India and the United States signed a nuclear -- a historic nuclear-cooperation agreement about a year and a half ago. Several weeks ago, there was this obstacle to U.S.-Indian nuclear cooperation, the passage of the nuclear-liability bill that was long awaited. And I guess there were some provisions in the bill that were not exactly favorable towards U.S. industry.

What is the feeling in India towards U.S.-India nuclear cooperation and the future of that cooperation?

SHARMA: I think that it is being misread. First, this was the demand of the industry and our partner countries that we should have a nuclear-liability bill passed by the Indian Parliament. We have entered into civilian nuclear energy cooperation agreements with the United States of America, with the Russian federation, with France, with the United Kingdom, with Canada, with Brazil, and we are going to do so with some other countries too.

We have to put your question in the historical perspective and global context. For three decades, or more than three decades, there was this hiatus when India was not part of the global mainstream. And the reasons are fairly well known. We've always had impeccable track record. Our credentials were never questioned.

The principal position which we took, influenced primarily by our own security concentrations and India's supreme national interest, which was recognized. And we fully appreciate and acknowledge the understanding and the support which India received from the United States of America in entering into an agreement which is India-specific with the IAEA, and also getting the NSG waiver in the year 2008.

Now, for this cooperation to move forward, our partners wanted legislation in India on this subject. Now, legislation is not an executive act. It goes to the Parliament. Let me tell you, unlike our big neighborhood, we are a multiparty democracy where every piece of legislation is very fiercely dissected and debated. And we are in majority in Parliament, but we do not have, even as a government, a monopoly over the members, because we have a substantial opposition. And they also have to vote along for a legislation to become an act of Parliament.

So the bill -- (inaudible) -- scrutiny from the standing committee, the present manner, in fact, even the standing committee recommendations, all of which the cabinet did not accept, but the cabinet debated it. And this particular clause which you are referring to is about the liability (that's applied ?).

Now, this is, again, a very limited one, the 17(d). It's very limited. If you read -- you have to read the act as such, not a clause, because you're an attorney. A clause in itself does not override the objectives of the legislation. So it has to be put in the whole body of the bill.

Now, this is only one small aspect. Now, we could not have a bill which is called civil nuclear liability bill, removing the word "liability" from it. In the legislation, minus the word "liability" would not be accepted to the Parliament. But as I use the word, it's very limited.

At the same time, this would be -- we have captains of Indian industry sitting there. Those who are sitting -- (inaudible). He knows much more about chemicals, industries and all. They are liabilities even for the domestic industry when it comes to these sectors, chemical sectors and other. Any country, even yours, will have its own legislation.

But what is going to happen? There will be agreement between the equipment manufacturers and the operators. That will be separate. Those will be individual commercial agreements. Presently many are under negotiations, for India is buying many reactors from France, from Russia, and those negotiations are on. So those will be individual agreements between the operating company, which in this case is the Nuclear Power Corporation of India, Limited.

And I'm sure that if there are any concerns when the equipment manufacturer and the equipment user in the operating company, they negotiate an agreement, they will get addressed. I feel that the concerns are misplaced. Those concerns have enough room to be addressed without any controversies.

HILLS: Yes, Tezi.

QUESTIONER: Good evening, Mr. Minister. Lovely to see you in Washington. I'm Tezi Schaffer from CSIS, Center for Strategic and International Studies.

I wanted to ask you a question about foreign investment in the Indian economy. In the past 10 years, the amount of investment by foreigners in India has gone up. The amount of investment by Indian companies outside of India has also gone up.

What do you see as the role of foreign investment in the Indian economy? Is this something that the Indian people and the Indian government want to increase, they see as a benefit to India, or is this something that is somehow a competitive problem for Indian industry? How do you see this developing over the next 10 years or so?

SHARMA: Developing only in one direction.

QUESTIONER: (Off mike) -- in foreign investment, but also what you see as the benefits or costs to the Indian economy of having increased foreign investment?

SHARMA: You see, we live in a global economy which is interconnected, which is interdependent, where the flows of capital within country and between countries are taking place. Even business decisions, when they are made for acquisitions and mergers, the way the funding of financing structures are put in place, there are many institutions within that country or outside that country who come into play.

We are very happy that we are being recognized as an attractive destination for foreign investors. We have put in place an investor-friendly regime, and we are always making the effort to further improve it so that we remain where we are, but we attract much more. A country or economy of India's size can absorb much more foreign direct investment.

I don't see any conflict between the local industry and the foreign direct investors. It's not only that we are attracting investments, but also we remain the country where the investments are not only secure because of the institutional mechanisms that we have as a democracy in place, but the returns from investments made in India as compared to similar investments in other emerging economies -- with due respect to them, they (have ?) partners -- are the highest out of India.

But at the same time, the Indian entities are also making investments abroad. That's exactly what I was referring to. If we have -- (inaudible) -- or British Petroleum coming into India to make investments, we have Indian private-sector giants like Reliance making huge investments in this region even recently. I referred to our Airtel Company making forays into other continents. And we look at Europe. Nobody would have thought that you have a very knowledgeable person 15 years ago to say that Corus Steel or Land Rover and Jaguar and Tetley's would be bought by an Indian entity, the Tatas, but that has happened.

So it's a two-way process. It will continue. These are business decisions which are made. And India, in the coming decades, can absorb much more, because if we are going to spend $1.7 trillion in our infrastructure, as I referred to, even in our agro sector, agro-processing and food-processing sector will take $250 billion in the coming years. These are big numbers. But if you look at other sectors, we do not know what the limits are.

That's why I used the word "limitless." And there will be funding requirements. And a lot of foreign capital will come, including foreign direct investment. And we will also be supportive of and encouraging of collaborative ventures, which will not bring in only capital, but also bring in technology. That is what I was referring to, true partnership.

HILLS: Yes.

QUESTIONER: I'm Susan Esserman from Steptoe & Johnson.

I wanted to follow up on that point and ask you where you see the greatest potential for collaboration in green energy. And do you see that there are different -- that there should be different models for technology sharing that would facilitate true collaboration between the U.S. and India in green technology?

SHARMA: Well, we -- this is one important area. That's the technologies I was referring to which will matter now and in the coming decade. To address the question of climate change, but even before the climate change -- (inaudible) -- took place, the CDMs were talked about, the clean-coal development -- (inaudible). This all was happening.

Now when we're talking of clean technologies or green technologies, this is again a process which has been going on, but this will get the momentum. And that's where the collaboration should take place, because we also have institutional strengths, and that's where the synergies are. We have human resources. You have institutions. You have human resources.

So it is -- what is available, we should become partners in manufacturing them. That's called trade in technologies. And what we aim to achieve, we can be partners in investing in research and innovation and manufacture -- make them jointly and make it available to other countries, and bear in mind, the need of those countries who do not have the capacity to mitigate or adapt. So for them, the parameters should be different and the considerations non-mercantile.

HILLS: The table in the back, the first lady, and then the gentleman, or --

QUESTIONER: Mr. Minister, Aziz Heniffa with India Abroad. Good to see you back in town.

You are right. Political season is on and political expediency is the name of the game. And once again H-1B visas, L-1 visas, has proved to be a convenient whipping boy. And President Obama has jumped on the outsourcing bandwagon too.

Before you left, you said that this was an issue that you were going to take up. And, in fact, you wrote a letter to Ron Kirk too. By the same token, there has been angst, even though you say it's misplaced, about the liability legislation. And the USIBC, in fact, issued a very guarded and cautious statement, and we can't get Ron Somers on the record now.

What I'm asking you is, with the fact that President Obama's trip is just about six weeks away and he himself likes it to be a very transformational visit, like that of President Clinton in March 2000, and wants something really big, how are you all going to alleviate these concerns and these hiccups and irritants and really have something major so that there will be some sort of a signature to his visit?

SHARMA: You see, I will not add anything more to what I have said on the civilian nuclear liability bill. I think I have comprehensively responded to this query which was raised by this young lady attorney.

Now the issue of visas. We have raised it; you're right. I have written to Ambassador Ron Kirk, and we have put it on the table. We are engaged in a strategic partnership, and I have shared my view that we should do only what helps in strengthening and consolidating this partnership, because there is so much at stake here, from agriculture to nuclear and space sciences, when we are engaged.

These developments, yes, sometimes end up creating transient negativity. I've used the word "transient" because it will get dissipated. It will hopefully get appropriately addressed when the larger picture is viewed. And that is what I urge also to the U.S. congressmen, that they should also have a balanced view as to what Indian investors, Indian industry, has succeeded in creating.

But that does not take away the enormous significance we attach to this partnership of the two big democracies. It's not only a dialogue. It's a partnership. I'm sure there will be many areas or deliverables, as we call it. Leaders have to look at the present. But when (the investing person ?) take a view, we must not lose sight of the long-term objectives.

It started in 2005, 18 July, when prime minister of India came here and signed what can be referred to as a historic joint declaration. Five years is a very short period for any society or country or in the history of relationship between countries. But so much has happened in these five years.

We will address these issues, not look at them as what is referred to, because any language gives us many words. We have to be careful in our choices. I won't refer to these as thorny issues. These are avoidable irritants, like what the Ohio outsourcing ban has been. And hopefully that will not happen. But we must not lose sight of the bigger picture.

HILLS: Back against the wall.

QUESTIONER: Thank you. (Inaudible) -- India Global Initiative.

Mr. Minister, my question is that when are we getting more mangoes from India?

SHARMA: I get enough back home. (You'll find out ?).

QUESTIONER: (Inaudible.) India is the world's largest democracy, but still we are not in the United Nations Security Council. And we keep talking for the last 60 years. I remember -- I was not, of course, here when Prime Minister Jawaharlal (Nehru) raised the same question with the United States, with President John Kennedy.

And also what do you see the difference between the -- (inaudible) -- of President Clinton, President Obama, and then also last time President Bush?

SHARMA: You see, I don't recall -- (inaudible) -- Nehru having raised with President Kennedy the Security Council issue. I myself said that the global architecture is changing. There has been a visible shift in the world when it comes to the political architecture and the economic one. Both the economic bodies, organizations, called the Bretton Woods institutions, must happily accept and adopt these changes.

Similarly, the U.N. Security Council, because when it was constituted, but for one addition which came later -- that's China, People's Republic of China, making it an exclusive group of P-5 -- the world has changed. You cannot have any body called representative and democratic in the contemporary context when a majority of the member states of the United Nations were not free nations to exercise their own choices and make their decisions.

When the United Nations formed, succeeding the League of Nations, which had collapsed, the present order must be reflected in the composition. And that can only be representative with the inclusion of those who have been kept out. You cannot have an effective U.N. Security Council which has no representation from the entire continent of Africa, the 54 countries, South America, and the largest democracy on the planet; that is, the Republic of India.

HILLS: Well, it's become 7:30, and the minister has a dinner tonight. Please join me --

SHARMA: (Inaudible.)

HILLS: -- in thanking him for a very wide-ranging -- (applause) -- and excellent presentation. And we thank you for the questions.

SHARMA: Thank you.

HILLS: Thank you so much.

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THIS IS A RUSH TRANSCRIPT.

CARLA HILLS: Welcome. I'm so glad to see all of you here. This is a terrific meeting. Let me start with the fact that it is on the record. We have press in the room, in true Council fashion. And I would ask each of you to turn off -- that is, off, not on vibrate, but off -- anything that is electronic, because if it is vibrating, it will interfere with the electronical system and the hearing system.

And this evening, because we have such an honored guest, we are joined by the honorable Rahul Khullar, who is India's secretary of commerce, and Arun Singh, who is the deputy chief of mission. And we have a number of members of the Indian business community here with us today, led by Mr. Mittal, who is seated here, from the Federation of Indian Chamber of Commerce and Industry.

And they're here, as all of you are, because we're privileged to have Minister Sharma, who is India's minister of commerce and industry, with us. He's really a very special government official. He's been trained as a lawyer, but he's very, very well known in Indian politics. He founded the student wing of the Congress Party, and he was elected to Parliament at the ripe old age of 31.

For six years, he served as the chief spokesman for his party, and he served as minister of state for both the external affairs and for information and broadcasting. But he also has a considerable amount of international experience, having served as a member of delegations by the Indian government to over 50 countries. He either led or was a member of those. And he's been recognized for his personal commitment against apartheid, convening major conferences in Delhi against apartheid when he served as president of India's Youth Congress.

His appointment as trade minister followed last year's stunning victory by the Congress Party. And I say stunning because it was the first government in over 40 years to be re-elected after a full term and in the midst of a global financial crisis. He is said to have played a strategic role in planning the election campaign.

Now, the minister has agreed to speak about 10 minutes from the podium, after which he will take questions from the floor and will engage each of you. So join me in welcoming Minister Sharma to the podium to address us. (Applause.)

COMMERCE AND INDUSTRY MINISTER ANAND SHARMA: Thank you, Carla Hills, Commerce Secretary of India Rahul Khullar, Deputy Chief of Mission Arun Singh, the president of the Federation of Indian Chambers of Commerce and Industry, Rahul Mittal, to recognize the president of CII, Mr. Hari Bhartia, for my ambassadors, captains of industry, senior officials, friends.

There are many I recognize in this room for whom I am not a stranger and they are not strangers to me. And they have been hearing us for a long time on a wide range of subjects.

I'm particularly delighted to be here at the Council for Foreign Relations, which has played over the years an important role in informed debate on matters pertaining to foreign affairs, diplomacy, but also other subjects which do impact societies and also decision-making processes in the country.

And it's my firm belief that discussions on matters which are of critical import to the masses in any society and democracy are important, particularly for countries like the United States of America and India, countries which are playing considerably an important role in the global affairs, U.S. being the world leader, the leading economy of the world. And India, as the largest democracy on this planet, as an emerging economy, has its own role to play.

Recognizing that, I find here a platform, a platform to share our views on the evolving economic situation in the world, India's own engagement, and also what is happening in our strategic partnership between New Delhi and Washington as we are preparing, both our governments, for the forthcoming visit, the first visit of the U.S. president, Barack Obama, in six weeks' time to India.

Last time, when I was speaking in Washington at the Peterson Institute -- and Carla Hills, you were there -- it was in a painful backdrop of the economic crisis that has engulfed the world. There was uncertainty. There was anxiety.

This year it's a different story. How different is difficult to say. But, yes, the first quarter of the first half of 2010 has brought some cheer to the economies, to the governments, to the industry. We hope that we are emerging, the global economy, from one of the worst crises that had affected countries across the globe in the last seven decades.

And that was a period when we saw the confidence dwindling. Capital flows were frozen for a considerable period of time. Even those who had the capacity to respond were slow or tentative in responding because of the enormity of the crisis. The investments also nose-dived from what was $1.9 trillion FDI in the world. It came down to $1 trillion.

Now, these are not mere numbers. There are many dimensions to this crisis as to what happened to the small and vulnerable economies, what happened to the larger issues we were grappling of human development, the Millennium Development goals, the issues of food security, energy security, health security, the challenge of pandemics. Everything was relegated to the background, and the social dimension of job losses -- 59 million, one figure says -- it could be much more.

Economic recovery has taken place, but not a robust recovery. It's uneven. It lacks uniformity, like the fall itself. We in India were also affected. I was speaking yesterday in Chicago, telling them that, having grown consistently for over 9 percent for five years, we were also pulled down to 6.7 percent. We have come back to high-growth trajectory. Hopefully this year we'll go to eight and a half, 9 percent.

We have also noticed robust recovery the last quarter in the United States of America. It is important for the world that U.S. grows and jobs return. We are strategic partners engaged in all those sectors, which can be described as sensitive and strategic.

And therefore, for us, this engagement between two largest democracies has a special meaning. But it is not restricted only to United States of America and India. What we do together also impacts not only our extended neighborhoods, but the geopolitics and the global economic discourse. And that we have to bear in mind.

Things are changing in the world. There's a major shift which we have seen, particularly with regard to the development of nations and economies. And that shift was very sharply underscored during the period of the economic crisis. There's a new fulcrum of economic stability in the world which will be there very soon. In the countries of the south -- (inaudible) -- Asia in particular playing a major role.

In three years, the economies of U.S., EU and Asia will be similar-sized, each contributing 25 percent to the global GDP. The next one decade, earlier than that, of the five major economies of the world, three will be from Asia. India will be one of those three.

So in that context, we have to view of a bilateral partnership. There are strengths which America has which are recognized and respected world over -- its resources, its institutions, its capacity to develop technologies, to invest in innovation.

And that's where I feel that there are synergies, given the demographic profile of both our countries, India's own commitment to institution-building, developing its human resources, and also our ability, particularly of Indian scientists, leaders in the field of knowledge sector, to be good partners in ensuring that we can absorb access, the best of technologies that are there in the world, and also helping inventing new ones. It's not only for the economic development, but for the betterment of humankind, whether it's in the health sector, the (generics ?). And its range is a huge one. I need not go into details.

We see this as one area where the bilateral engagement has been a bit deficient, and that's an understatement. We have brought strong investments from both our countries, from India into America and from U.S. into India. U.S. is the third-largest investor in the Indian economy. But we are one of the first three favored destinations for FDIs. We remained one even during the economic downturn. And this is bound to improve.

It's not a question of ranking. It's a question of what India will be able to absorb as we continue to grow at a fast pace, the second-fastest-growing economy in the world. We'll be absorbing close to $1.7 trillion only in infrastructure building in the next 10 years.

I see many of the U.S. corporate leaders who have met me in my Delhi office and nodding heads because they know what the potential is. The opportunities are limitless. There's no restriction on opportunities. And there are other fields, whether it's agriculture, the manufacturing sector. But the high end of technology is important.

The U.S. has been trading in high technology, to the extent of 600 billion U.S. dollars. There's $10 billion of high-technology trade with India. That is what must be corrected. We have to be partners in manufacturing these technologies, but also in investing in new technologies, particularly innovation.

Like the last two decades, the world is witnessing yet another wave of technologies, and which is bound to happen as we continue to grapple with the present challenges and the new ones present themselves. It's not the complaint of the present generation of governments and leaders in diverse fields.

That has been the story ever since humankind benefited from the technologies, particularly those which came with the industrial age. That created a different world. And the last wave has bridged the divide, to some extent. (Inaudible) -- professionals, particularly in the information technology and science and biosciences, biotechnologies, have made their own contribution, which needs to be put in a proper perspective.

I was talking to the media just before I drove here, and there were many questions which were raised as to what has been discussed. You know, and we do not mind the media to be inquisitive. And they have to be, because they have to disseminate information, as long as they do it without adding their own interpretation. But our interpretation, that's always helpful.

But, yes, the questions were many, particularly about the services sector and the technology sector. What must be recognized, that we live in a world which is very much different from the world which we have read about the first half of the last century, and it changed dramatically post-Second World War when the new technologies came, and those countries which were the beneficiaries of the first flash of technologies continued to benefit.

But in the last two decades, it is the professionals, the scientists from the emerging economies, including India, who have made their own contribution. I am referring to the IT sector and other related services sectors.

What needs to be fully recognized, and I find that it is not, that it's a two-way process when countries are engaged in partnership, when we invest in each other's economies, each other's institutions. It's the Indian industry which has sustained, saved or created a very large number of jobs in the United States of America and in Europe during a critical period. I'm talking of 2008-2009. And those figures are in public domain.

Last year, you will recall, when I was speaking at the Peterson Institute last March, we released a study -- it was done by the CII in partnership with the Peterson Institute -- which clearly demonstrated that over 300,000 jobs were created in less than five years by the Indian investments, Indian industry, and 250,000 of those jobs were in IT sector. We also -- (inaudible) -- of other investments which have been created through the mergers and acquisitions, the jobs which have been saved or sustained, another 100,000.

Perhaps this aspect has not been fully brought about. This is what I feel is when we look at some of the actions with regard to the Indian IT professionals, who have to be respected for what they have achieved in a country which struggled with monumental developmental challenges after its independence, and independence which came following centuries of subjugation and exploitation.

So we are very proud of the sons and daughters who have been able to achieve this and make their own contribution in the development of other countries. So it's not as if they are depriving people anywhere, including in this country. They are assisting in their own manner, and so are our investors.

We have one Indian company -- Rahul Mittal is sitting right in front -- the Airtel. They have expanded. They have -- (inaudible) -- to other continents. But recently they placed an order of three and a half billion dollars in IBM. This should be something, I feel, adequately communicated to our wise brothers and sisters who populate the U.S. Congress, that it is the other way also they need to look at to put things in a proper perspective and take a fair and objective view of the matter.

I have been to distant corners of the world. We have seen Indian -- the so-called BPOs. But they are not operating from Bangalore. I have seen them operating from Quito in Ecuador, seen them operating in Guatemala. I've seen them operating in African continent.

And I always ask, as is my nature, "How many employees do you have? How many of the local employees?" because I feel that our businesses, both public and private sector, have to follow the right ethics, right ethics, particularly with regard to the countries which need that support in Africa and South America, in the Caribbean, that even if they do not have people who are able to work, they should make them employable by empowering them. And that's exactly what they have been doing.

Both our countries have expectations of our people. There are times when leaders are under pressure -- economic crisis, job losses -- to test the mettle of the leaders, the governments. And the governments have to respond to the domestic concerns, I understand, to the popular concerns.

But I have said so, and I repeat here again, there is a natural tendency to look inwards. That has happened in the past. And the lessons learned have been very painful. Protectionism is regressive. It's counterproductive. Those who have to provide leadership should avoid that.

We stepped out last year to engage more with the world. You were talking to me about the WTO and Doha, and I'm sure that we will have occasion to refer to that. But we did consciously enter into comprehensive economic partnership agreements, the free-trade agreements, be it Korea or ASEAN, and fast-tracked our negotiations with many other countries. The commerce secretary knows that what we have done in recent months and before the end of the year, it will hopefully bring to closure some of their agreements.

Difficult times mean that the time is to dismantle the barriers, not to erect new ones. By enhancing global commerce, we will be able to ensure an early and sustainable recovery. By not doing so, we will have to reflect one day as to why we did not.

I hope the forthcoming visit of President Obama, who is much loved and respected in my country, for obvious reasons -- a country which shares the same values of democracy, of liberty, of human rights and justice, and a country which has led to its own freedom with the values, the ideals of none other than Mahatma Gandhi, whose values influenced many movements in different corners of this planet, including the civil-rights movement -- and therefore, we hope his visit to India will open new pathways of cooperation and consolidate the partnership between the two great democracies. That's India and America.

Thank you. (Applause.)

HILLS: While Minister Sharma is getting his microphone, let me just pose the first question slowly so he can think about it.

You mentioned the two largest democracies working together, the partnership. And I think that we'd be interested in your views as to whether India and the United States could partner in moving forward, both the Doha Round through the G-20, but also in dealing with some of the issues you raised. The imbalance in the global economy is sharp. And unless we correct it, we're likely to have another crisis.

SHARMA: Yes.

HILLS: And the question is, how do we bring the nine members of Asia together with the 11 members outside of Asia? How do we bring China and the United States, one who has too large a deficit and the other that has too large a surplus? Talk a little bit about how India and the United States might work together to both open markets, which you've addressed, through Doha, bringing services in --

SHARMA: Yes.

HILLS: -- and also dealing with the background that makes it difficult to open markets; that is, this global imbalance.

SHARMA: We can, in my view. The ongoing negotiations in the WTO have seen much human energy and time having been expanded as -- (inaudible) -- nine years. It's high time that it is taken to its rightful conclusion.

This round is dedicated to development, to the centrality of the developmental dimension, and multilateralism has to be borne in mind. At the same time, if it concludes at an early date, what kind of conclusion it will be, I know that there cannot be any multilateral agreement which can meet the expectations and aspirations of each country which is involved in those negotiations. We have more than 150 countries involved.

Now, each one have brought to the table what their issues or expectations are. And in negotiations, as we know, it's important to find the middle ground where everybody is comfortable to stand upon. There are no perfect solutions to such negotiations. So we have to accept, in the spirit of accommodation and give and take, bearing in mind that the poorer economies, the LDCs, must get better access.

But once a rule-based multilateral trade regime is put in place which is fair and balanced, at least which is perceived to be fair and balanced by all, it'll give a great -- (inaudible) -- to the global commerce.

I know that there is now -- it's pretty fashionable to quantify -- I've heard it many times -- as to how much America will gain in the first year, how much India will gave or what China's gains would be. As leading big economies, we should be looking at the big picture. Gains will be there, but gains will keep on changing. Figures are never frozen. If what was quantified as the gains for A country of B country last year, this year the economic discourse is different than what it was in 2008 or 2009. Therefore, the need is to give it a push.

It's true that the key interlocutors have to play a role, both from the developed countries and the emerging economies. India very rightly identified the countries. And you referred to G-20 as to what G-20 can do. G-20 has emerged as an inclusive platform, a representative platform of the current global economic realities.

And it's good that it has happened, because the earlier platforms or the initiatives of G-8 plus five, G-8 plus-plus, was more patronizing and non-representative, because we could not have -- both the political and economic architecture could not have remained frozen, the order that emerged after the Second World War.

Things have changed. And G-20, therefore, is inclusive. And the coordinated responses of the G-20 countries, the intervention by governments, the stimulus packages, incentives which were given, helped in stabilizing the global economy and also guided the recovery. So that cooperation must remain.

Now, G-20, some have said repeatedly, directed us, the ministers -- (inaudible) -- commerce secretary said he will ask the chief negotiators, "You go and resume." The mandates have to be very clear. G-20 summit in Pittsburgh talked about concluding it in 2010, and that was not reaffirmed as forcefully in Toronto. But what has been said by the G-20 leaders -- and we are party to that declaration, and my prime minister has been consistently of this view -- Dr. Manmohan Singh, besides being the prime minister, is an eminent economist -- that this is the need of the hour to conclude the WTO negotiations.

Now, we have been asked to report in Seoul the next G-20 summit. But the fact is that after Toronto, but for some meetings in the margins which the key ministers have had, there has not been any structured interaction. So I am going to go from here to Peterson Institute, where they have some of those who will participate in tomorrow's global services summit present there.

I have been raising this question recently with the Chinese minister, Chen Deming, and with Ambassador Ron Kirk, with the EU trade commissioner, and also with our key coalition partners of the developing countries coalition in the WTO.

I think the intent to run the final lap has to be very loudly declared by the G-20. If that happens and every country which is giving -- subscribing to the declaration also gives the requisite mandate to the chief negotiators, we will reach there.

HILLS: You say if it happens. What odds do you give it?

SHARMA: If it happens, then it should be -- I will not put a date, but I feel that a large number of issues, agreement has been reached. And the tendency to reopen the closed issue should not be there. But that will be unraveling the process itself. And if there remain issues, irrespective of whether those issues are -- (inaudible) -- issues, whether those are big issues, the remaining gaps may be 20 percent to 25 percent.

Those gaps must be closed. And they should be finished as a single undertaking. It's agreement on agriculture, on services, on NAMA, on investment. It should be a single undertaking, not piecemeal that we will do this now, then we will start struggling over the second. Those additions have been there, and I'm personally not in favor because I don't think that is demonstrative of confidence that we have in ourselves or commitment to the process.

HILLS: Let me open it up and ask the audience.

Yes. State your name and affiliation so that the minister knows who's talking to him.

QUESTIONER: Steve Schwebel, arbitrator.

At the time of independence, India's population was on the order of 400 million, and today it exceeds a billion. What, if anything, is being done to constrain the growth of India's population?

SHARMA: Steve, you're right that we were maybe 350 million or a little less than that at the time of independence and India's partition. Population has grown, and we are 1.1 billion, if not a bit more, because the census is on. So we will know the final numbers in a few months' time.

I think steps are there -- public awareness, health campaigns in rural areas. And it's not that there has been an exponential or explosive growth in recent years. As incomes and standards of living are moving up in urban areas, there is one disturbing trend too. Even if we are 1.1 billion people, the younger people, if both of them happen to be working, they're not subscribing to raising families. It has happened in Europe. It has happened elsewhere. So this is a flip side to it also, that if you go overboard, overzealous in pushing for controlling, China has done it. A few years down the line, they may not be celebrating that, because this country will know better.

You are also a populous country, but you are much bigger in area as compared to India. But one of the strengths that the United States of America will continue to have is the demographic profile and the demographic dividend. I know, growing up, in my college days, university days, when we were told that India produces one Australia in a year, and this is the bane or the curse. Today I don't look at it from that perspective.

We are a young nation-state. But over two thirds of our people are young. Today, unlike in 1947 or '50s, they have access or increasing access to the tools of empowerment, to education. Many of them may not go to universities; will get trained in skills. We will have, I was mentioning in Chicago yesterday, in 10 years from now, 200 million Indians joining the workforce.

In the global context, these Indian assets are global assets, because there is a projected contraction of the skilled workforce in the world. Many of the countries which have boasted of manufacturing as their strength will not be able to sustain that because they will not have the young men and women to sustain it.

Therefore, to my mind, in the coming decades they will prove to be a strength. Yes, there will be a time which will happen, as life spans have increased, and India will also have a sizable aging population. And we'll grapple with the challenge of having small number of young people. So I think, as of now, it is under control. We'll be able to manage.

HILLS: Question? Yes, in the back.

QUESTIONER: Hi. Elina Teplinsky. I'm an attorney at Pillsbury Winthrop Shaw Pittman here in Washington, D.C.

And my question concerns India-U.S. nuclear cooperation. As I'm sure everyone in this room knows, India and the United States signed a nuclear -- a historic nuclear-cooperation agreement about a year and a half ago. Several weeks ago, there was this obstacle to U.S.-Indian nuclear cooperation, the passage of the nuclear-liability bill that was long awaited. And I guess there were some provisions in the bill that were not exactly favorable towards U.S. industry.

What is the feeling in India towards U.S.-India nuclear cooperation and the future of that cooperation?

SHARMA: I think that it is being misread. First, this was the demand of the industry and our partner countries that we should have a nuclear-liability bill passed by the Indian Parliament. We have entered into civilian nuclear energy cooperation agreements with the United States of America, with the Russian federation, with France, with the United Kingdom, with Canada, with Brazil, and we are going to do so with some other countries too.

We have to put your question in the historical perspective and global context. For three decades, or more than three decades, there was this hiatus when India was not part of the global mainstream. And the reasons are fairly well known. We've always had impeccable track record. Our credentials were never questioned.

The principal position which we took, influenced primarily by our own security concentrations and India's supreme national interest, which was recognized. And we fully appreciate and acknowledge the understanding and the support which India received from the United States of America in entering into an agreement which is India-specific with the IAEA, and also getting the NSG waiver in the year 2008.

Now, for this cooperation to move forward, our partners wanted legislation in India on this subject. Now, legislation is not an executive act. It goes to the Parliament. Let me tell you, unlike our big neighborhood, we are a multiparty democracy where every piece of legislation is very fiercely dissected and debated. And we are in majority in Parliament, but we do not have, even as a government, a monopoly over the members, because we have a substantial opposition. And they also have to vote along for a legislation to become an act of Parliament.

So the bill -- (inaudible) -- scrutiny from the standing committee, the present manner, in fact, even the standing committee recommendations, all of which the cabinet did not accept, but the cabinet debated it. And this particular clause which you are referring to is about the liability (that's applied ?).

Now, this is, again, a very limited one, the 17(d). It's very limited. If you read -- you have to read the act as such, not a clause, because you're an attorney. A clause in itself does not override the objectives of the legislation. So it has to be put in the whole body of the bill.

Now, this is only one small aspect. Now, we could not have a bill which is called civil nuclear liability bill, removing the word "liability" from it. In the legislation, minus the word "liability" would not be accepted to the Parliament. But as I use the word, it's very limited.

At the same time, this would be -- we have captains of Indian industry sitting there. Those who are sitting -- (inaudible). He knows much more about chemicals, industries and all. They are liabilities even for the domestic industry when it comes to these sectors, chemical sectors and other. Any country, even yours, will have its own legislation.

But what is going to happen? There will be agreement between the equipment manufacturers and the operators. That will be separate. Those will be individual commercial agreements. Presently many are under negotiations, for India is buying many reactors from France, from Russia, and those negotiations are on. So those will be individual agreements between the operating company, which in this case is the Nuclear Power Corporation of India, Limited.

And I'm sure that if there are any concerns when the equipment manufacturer and the equipment user in the operating company, they negotiate an agreement, they will get addressed. I feel that the concerns are misplaced. Those concerns have enough room to be addressed without any controversies.

HILLS: Yes, Tezi.

QUESTIONER: Good evening, Mr. Minister. Lovely to see you in Washington. I'm Tezi Schaffer from CSIS, Center for Strategic and International Studies.

I wanted to ask you a question about foreign investment in the Indian economy. In the past 10 years, the amount of investment by foreigners in India has gone up. The amount of investment by Indian companies outside of India has also gone up.

What do you see as the role of foreign investment in the Indian economy? Is this something that the Indian people and the Indian government want to increase, they see as a benefit to India, or is this something that is somehow a competitive problem for Indian industry? How do you see this developing over the next 10 years or so?

SHARMA: Developing only in one direction.

QUESTIONER: (Off mike) -- in foreign investment, but also what you see as the benefits or costs to the Indian economy of having increased foreign investment?

SHARMA: You see, we live in a global economy which is interconnected, which is interdependent, where the flows of capital within country and between countries are taking place. Even business decisions, when they are made for acquisitions and mergers, the way the funding of financing structures are put in place, there are many institutions within that country or outside that country who come into play.

We are very happy that we are being recognized as an attractive destination for foreign investors. We have put in place an investor-friendly regime, and we are always making the effort to further improve it so that we remain where we are, but we attract much more. A country or economy of India's size can absorb much more foreign direct investment.

I don't see any conflict between the local industry and the foreign direct investors. It's not only that we are attracting investments, but also we remain the country where the investments are not only secure because of the institutional mechanisms that we have as a democracy in place, but the returns from investments made in India as compared to similar investments in other emerging economies -- with due respect to them, they (have ?) partners -- are the highest out of India.

But at the same time, the Indian entities are also making investments abroad. That's exactly what I was referring to. If we have -- (inaudible) -- or British Petroleum coming into India to make investments, we have Indian private-sector giants like Reliance making huge investments in this region even recently. I referred to our Airtel Company making forays into other continents. And we look at Europe. Nobody would have thought that you have a very knowledgeable person 15 years ago to say that Corus Steel or Land Rover and Jaguar and Tetley's would be bought by an Indian entity, the Tatas, but that has happened.

So it's a two-way process. It will continue. These are business decisions which are made. And India, in the coming decades, can absorb much more, because if we are going to spend $1.7 trillion in our infrastructure, as I referred to, even in our agro sector, agro-processing and food-processing sector will take $250 billion in the coming years. These are big numbers. But if you look at other sectors, we do not know what the limits are.

That's why I used the word "limitless." And there will be funding requirements. And a lot of foreign capital will come, including foreign direct investment. And we will also be supportive of and encouraging of collaborative ventures, which will not bring in only capital, but also bring in technology. That is what I was referring to, true partnership.

HILLS: Yes.

QUESTIONER: I'm Susan Esserman from Steptoe & Johnson.

I wanted to follow up on that point and ask you where you see the greatest potential for collaboration in green energy. And do you see that there are different -- that there should be different models for technology sharing that would facilitate true collaboration between the U.S. and India in green technology?

SHARMA: Well, we -- this is one important area. That's the technologies I was referring to which will matter now and in the coming decade. To address the question of climate change, but even before the climate change -- (inaudible) -- took place, the CDMs were talked about, the clean-coal development -- (inaudible). This all was happening.

Now when we're talking of clean technologies or green technologies, this is again a process which has been going on, but this will get the momentum. And that's where the collaboration should take place, because we also have institutional strengths, and that's where the synergies are. We have human resources. You have institutions. You have human resources.

So it is -- what is available, we should become partners in manufacturing them. That's called trade in technologies. And what we aim to achieve, we can be partners in investing in research and innovation and manufacture -- make them jointly and make it available to other countries, and bear in mind, the need of those countries who do not have the capacity to mitigate or adapt. So for them, the parameters should be different and the considerations non-mercantile.

HILLS: The table in the back, the first lady, and then the gentleman, or --

QUESTIONER: Mr. Minister, Aziz Heniffa with India Abroad. Good to see you back in town.

You are right. Political season is on and political expediency is the name of the game. And once again H-1B visas, L-1 visas, has proved to be a convenient whipping boy. And President Obama has jumped on the outsourcing bandwagon too.

Before you left, you said that this was an issue that you were going to take up. And, in fact, you wrote a letter to Ron Kirk too. By the same token, there has been angst, even though you say it's misplaced, about the liability legislation. And the USIBC, in fact, issued a very guarded and cautious statement, and we can't get Ron Somers on the record now.

What I'm asking you is, with the fact that President Obama's trip is just about six weeks away and he himself likes it to be a very transformational visit, like that of President Clinton in March 2000, and wants something really big, how are you all going to alleviate these concerns and these hiccups and irritants and really have something major so that there will be some sort of a signature to his visit?

SHARMA: You see, I will not add anything more to what I have said on the civilian nuclear liability bill. I think I have comprehensively responded to this query which was raised by this young lady attorney.

Now the issue of visas. We have raised it; you're right. I have written to Ambassador Ron Kirk, and we have put it on the table. We are engaged in a strategic partnership, and I have shared my view that we should do only what helps in strengthening and consolidating this partnership, because there is so much at stake here, from agriculture to nuclear and space sciences, when we are engaged.

These developments, yes, sometimes end up creating transient negativity. I've used the word "transient" because it will get dissipated. It will hopefully get appropriately addressed when the larger picture is viewed. And that is what I urge also to the U.S. congressmen, that they should also have a balanced view as to what Indian investors, Indian industry, has succeeded in creating.

But that does not take away the enormous significance we attach to this partnership of the two big democracies. It's not only a dialogue. It's a partnership. I'm sure there will be many areas or deliverables, as we call it. Leaders have to look at the present. But when (the investing person ?) take a view, we must not lose sight of the long-term objectives.

It started in 2005, 18 July, when prime minister of India came here and signed what can be referred to as a historic joint declaration. Five years is a very short period for any society or country or in the history of relationship between countries. But so much has happened in these five years.

We will address these issues, not look at them as what is referred to, because any language gives us many words. We have to be careful in our choices. I won't refer to these as thorny issues. These are avoidable irritants, like what the Ohio outsourcing ban has been. And hopefully that will not happen. But we must not lose sight of the bigger picture.

HILLS: Back against the wall.

QUESTIONER: Thank you. (Inaudible) -- India Global Initiative.

Mr. Minister, my question is that when are we getting more mangoes from India?

SHARMA: I get enough back home. (You'll find out ?).

QUESTIONER: (Inaudible.) India is the world's largest democracy, but still we are not in the United Nations Security Council. And we keep talking for the last 60 years. I remember -- I was not, of course, here when Prime Minister Jawaharlal (Nehru) raised the same question with the United States, with President John Kennedy.

And also what do you see the difference between the -- (inaudible) -- of President Clinton, President Obama, and then also last time President Bush?

SHARMA: You see, I don't recall -- (inaudible) -- Nehru having raised with President Kennedy the Security Council issue. I myself said that the global architecture is changing. There has been a visible shift in the world when it comes to the political architecture and the economic one. Both the economic bodies, organizations, called the Bretton Woods institutions, must happily accept and adopt these changes.

Similarly, the U.N. Security Council, because when it was constituted, but for one addition which came later -- that's China, People's Republic of China, making it an exclusive group of P-5 -- the world has changed. You cannot have any body called representative and democratic in the contemporary context when a majority of the member states of the United Nations were not free nations to exercise their own choices and make their decisions.

When the United Nations formed, succeeding the League of Nations, which had collapsed, the present order must be reflected in the composition. And that can only be representative with the inclusion of those who have been kept out. You cannot have an effective U.N. Security Council which has no representation from the entire continent of Africa, the 54 countries, South America, and the largest democracy on the planet; that is, the Republic of India.

HILLS: Well, it's become 7:30, and the minister has a dinner tonight. Please join me --

SHARMA: (Inaudible.)

HILLS: -- in thanking him for a very wide-ranging -- (applause) -- and excellent presentation. And we thank you for the questions.

SHARMA: Thank you.

HILLS: Thank you so much.

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