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Indian Ambassador Visits Palo Alto and Milpitas, Touting Country's Economic and Security Roles

Ambassador Meera Shankar said technology innovation is at the forefront of U.S.-India economic relations, in her talk with business leaders in Palo Alto Friday.

India-U.S. Ambassador Meera Shankar spoke to a crowded room of about 70 business leaders in Silicon Valley on Friday evening at the Garden Court Hotel in Palo Alto, in a Bay Area visit that included Milpitas, with its large Indian community.

Technology innovation drives the economic relationship between the U.S. and India, Shankar said. 

“The many ties that there are driven by the information technology sector here in Silicon Valley will continue to be a critical instrument in bringing our two countries closer together,” she said.

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The ambassador spoke at the India Community Center in Milpitas Thursday, where she met with about 100 people, mostly Indian Americans. Council members Anu Natarajan of Fremont and Jamie McLeod of Santa Clara were also in attendance, hoping to hear how they could strengthen the Indo-U.S. ties locally.

In Milpitas, the ambassador emphasized India’s role in building peace and security in the broader Asian region. As an indication of its widening diplomatic influence, India was elected in January to be a non-permanent member of the U.N. Council for the next two years. Shankar indicated their first rounds of consultations went off “extremely well.” President Obama’s backing of India’s permanent United Nations Security Council seat has only bolstered Indo-U.S. relations.

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“Within our own region, there is the challenge of stabilizing the situation in Afghanistan and Pakistan,” said Shankar. “It is a common challenge, and we share the objective of bringing forth stability, prosperity and moderation to this region.” Joint projects are being initiated to increase women's empowerment, police training and agriculture in those regions.

Some of the participants voiced their concerns about tightening of regulations surrounding H1B visas and Indian passports. 

At the Palo Alto event, the ambassador said the Indian economy has weathered the global economic crisis better than most. During 2008, India’s economy grew at 6.8 percent, she said. At the height of the economic boom, India’s economy grew at about 11 percent. Although there was a slowdown, “we did not go into recession,” she said.

Since then, growth has bounced back. “In 2010, we were poised to grow at 8.6 percent," she said. "For 2011, the prediction is for growth to be about 9 percent.” 

The Indian government is making it easier for foreign companies to invest in the country, she said. The Indian government is investing billions in expanding infrastructure, medical care, education, agriculture and bio-technology, she said. There are great opportunities for public-private partnerships in these areas, she said.

She hoped that there would be more reciprocity in investments from the U.S. The recent U.S. protectionist rhetoric over outsourcing was a concern for some in the audience.

“There is a degree of creeping protectionism, which constrains the ability to have meaningful growth in trade in this sector [the service sector]," she said. “We hope that this is a temporary phenomenon and is not something that is becoming entrenched.” The service sector comprises one of the largest portions of India’s GDP, she said.

In 2010, U.S. and India trade in goods was $48.75 billion going both ways, she said. In 2008, the services trade going both ways was $38 billion–$19 billion of which was in U.S. exports to India and $18 billion of which was Indian exports to the U.S., she said. She emphasized that the U.S. holds a surplus in exporting services to India. But service exports “is a two-way street,” she said.

India was the second-fastest-growing investor in the United States, she added. From 2005-09, India invested $25.5 billion in the U.S., she said. Of that, $5.5 billion went to green-technology ventures while $20 billion went to “mergers and acquisitions in steel, manufacturing, pharma, information technology and hotels,” she said. “India continues to deposit faith that the U.S. economy will bounce back.” 

Indian companies are expanding their global reach beyond the Indian market, she said. Having a presence in the U.S. is key, she said.

Enhancing local economies is the goal of many foreign Indian investors in the United States, she said. “Wherever Indian investors have gone, they have helped to turn around the economies,” she said. “They have not invested with a view to crushing the competition.”

Indian companies want access to additional markets and technologies, and hope to integrate with operations back home in India, she said.

The Indian economy has a different growth model from the East Asian economies, she said. The East Asian economies center growth more around exports and domestic demand, she said. The total contributions of exports to the Indian GDP is less than 25 percent. While India has a deficit, “we buy more goods from the world than we sell to the world,” she said.

“I do hope our deficit doesn’t reach U.S. levels, but it does mean that India will consumer more as we prosper, and that will provide opportunities for U.S. companies to position themselves in the Indian marketplace,” she said.

The invitation-only event was hosted by the the U.S.-India Business Council, an advocacy organization whose interest is to promote trade and investment between the two countries.

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