U.S. supports Modi’s economic vision, says envoy


October 22, 2014

Last month’s summit in Washington between President Barack Obama and Prime Minister Narendra Modi was successful in reaffirming the importance of the India-U.S relationship and the need to “re-energies” it, especially in the light of the new Indian leadership’s economic vision, U.S Ambassador Kathleen Stephens told The Hindu.

October 22, 2014

Last month’s summit in Washington between President Barack Obama and Prime Minister Narendra Modi was successful in reaffirming the importance of the India-U.S relationship and the need to “re-energies” it, especially in the light of the new Indian leadership’s economic vision, U.S Ambassador Kathleen Stephens told The Hindu.

U.S. Ambassador to India, Kathleen Stephens, during an interview in Chennai on Tuesday.

The visit yielded little in terms of tangible outcomes, especially in terms of the Indian wish-list, which included relaxation on the H1B work visa restrictions that have affected Indian IT companies and professionals. American business, with its continuing concerns about Indian taxation laws and its intellectual property rights regime, also refrained from making any concrete commitments.

But the U.S envoy said that the more important aspect of the visit was the recommitment to the partnership at the highest political level.

“The reason I believe it was a success was that our two leaders were able to establish a good communication, a good chemistry, which will be essential in going forward with the work that we want to do together in the many, many specific areas that we have agreed,” Ms. Stephens said in an interview here.

Importantly, Ms. Stephens said, it was an opportunity for the U.S government and American private businesses to understand first hand his economic vision for India. The U.S. supports his plans for “moving India forward in terms of its economy and development.” She was confident that both sides would “find a way out” of the concerns that have bogged down trade relations on both sides.

“We are certainly encouraging American business to look at the opportunities and to engage with their Indian partners,” Ms. Stephens said. “We do welcome the signs and steps that the Modi government has taken in its early months, including increasing the caps on foreign investments in certain sectors; and we think there will be more. But that’s for business to judge. And what I hear from business is that they would like to see further steps that would make and help India an easier place to do business.”

But the U.S expects the momentum for change to come from businesses themselves, with the government only playing the role of facilitator, she said.

The full text of the interview can be read below

During a visit to Chennai, Ambassador Kathleen Stephens, the charge d’affaires at the U.S Embassy in New Delhi, answered questions on the way forward after the Modi-Obama summit in Washington in an interview. Full text of the interview:

What in the U.S. is view are the most important takeaways from the Prime Minister Modi’s visit?

We are very pleased with the visit. We are very pleased that Mr. Modi was able very early in his tenure to come not just first to the United Nations General Assembly to speak, but also come to Washington, for what we have assessed as a very successful summit between the two leaders who are meeting for the first time.

First and foremost from our point of view, the reason I consider it as success is that our two leaders did meet for the first time and they were able to establish a good communication, a good chemistry. It established a good rapport which will be essential in going forward with the work that we want to do together in the many, many specific areas that we have agreed.

The second point was to articulate and to reaffirm a vision of why it makes sense for the U.S. and India to reenergize the process of deepening our partnership, and that was the op-ed that they published together, which is little unusual for us to do and was kind of special and shows the important that we feel of reaching to our peoples as democracies to explain why we have undertaken this very important Endeavour that we have recommitted to. And to step away from the very important day to day work that we do and look at the 21 st century President Obama has called the U.S.-India relationship the defining partnership of the century — what does that actually mean and trying to articulate that for ourselves and for our people.

Apart from these intangibles were there any specific outcomes from Prime Minister Modi’s visit from either side? The outcome of the visit in terms of agreements? For instance when PM went to Japan there were announcements of Japanese investments in India…

There were announcements for funding from the Exim bank for energy projects. But I think you are right. That was not the important aspect of the visit. The way I would look at it is this we have talked about our strategic partnership for some time and we have broadened our relationship over the last two decades. It is become very, very broad. There is almost no area in which we don’t work together in some way. But I think we recognize that as broad as it is in each of these areas, whether it is defence cooperation or countering violent extremism or addressing global health challenges or growing trade and investment, there is a lot of room to deepen these relationships, that we have not realized the full potential of our cooperation in these areas.

So if you look at the “to do” list from the visit, it is very long and it is aimed at deepening them. To the extent that governments can deepen them we do it by identifying mechanisms to work together on the areas where we need to come to a common approach. So we have lots of meetings — that’s what governments do. But these meetings are important to try to find a ways to work through some of the issues that have sometimes been difficult for us in the past. The other underlying message of this visit is that the United States heard what Prime Minister Modi was proposing as the way forward for India and it is very much a message, as I understand it, of reinvigorating India’s economic growth of creating jobs of moving India forward in terms of its economy and development. That is something that the United States supports.

One, because it is a good thing for hundreds of millions of people, but it is a good thing for the U.S. and for the world to have an India that has the kind of economy that supports India playing a larger, more robust role in the world and in the region for democracy, for peace, for what we considered to be our common values.

So the other part of the visit was our wanting to hear Prime Minister Modi’s vision. He spent a lot of time talking to business leaders, and how we can sit together at a political level to support it and secondly how we can facilitate that because his vision of economic growth is not something that the U.S. government is going to deliver. To the extent that the U.S. government is going to be a partner in it, it is going to be our businesses; it is going to be our academic institutions. It is going to be our private citizens including the Indian diaspora, but more broadly people who see this as a natural partnership. So there is the message of wanting to signal to those communities that we stand behind this as a government. But it is not a government driven thing.

I would say it is a government encouraged effort to see how we can deepen collaboration, our partnership across the board. And one reason I am so optimistic is what I am hearing from the business community and the financial community and indeed, from the Indian community. My impression is that there is great interest and optimism. But we are in the early days of this and we want to help create the momentum to push it forward in a positive direction.

You said the other day at a meeting in Chennai that India is open for business again. Yet if there is one outstanding development on trade issues after the Modi government came in, it is the decision to block the trade facilitation agreement at the WTO. So what gave the U.S. confidence that the Modi government is open for business?

Firstly we heard it very clearly from Prime Minister Modi that India is open for business. I am not saying it by myself. We are certainly encouraging American business to look at the opportunities and to engage with their Indian partners. We do welcome the signs and steps that the Modi government has taken in its early months, including increasing the caps on foreign investments in certain sectors; and we think there will be more. But that’s for business to judge. And what I hear from business is that they would like to see further steps that would make and help India an easier place to do business. As you know India is way down on the global list — not a U.S. list — of ease of doing business. That impacts perceptions as well as reality and it needs to be addressed. But with respect to the issue at the WTO on the agreement on trade facilitation that is a multilateral issue. It is not an issue solely between India and the U.S. Certainly, the U.S. position is that the trade facilitation agreement will deliver important benefits for India for developing countries around the world. It is very important, and we want to see it go forward.

We understand that India has raised these concerns about food security and as Michel Froman, our Trade Representative said we are sympathetic to the concerns that India has had in those area and we had tried to address them last December. We thought we had an agreement. We would like to see this go forward and we will continue to work to see this go forward. But there is broader perspective in terms of what American business are seeing is happening here. As I said we are just at the start of this. But I think at the moment they are interested in these and they are engaged and they want to go forward.

At a meeting of the U.S.-India business council at Washington recently U.S. Commerce Secretary Penny Pritzker said some “early win” are required to prove Prime Minister Modi is sincere in his assurances. What is the U.S. specifically looking at? Is there a timeline?

I think the crucial point here is that the businesses themselves will at some point make the decision that things are two difficult. It is not a time line that somehow the U.S. government can or wants to impose. But we are trying to stimulate some of these early wins through things like the infrastructure platform that Secretary Pritzker has set up with the Department of Commerce where we are trying to sort of match-make between U.S. companies that bring the kind of technology, capability and investments that would be useful and important in achieving some of the Indian governments infrastructure goals, particularly in the area of smart cities.

We did identify three cities in India where we are going to try to do our best to convening agents of pointing American companies towards these cities. They could pick others too. We are not going to force anybody to do anything, except point to areas of opportunity and then try to use our relationships at the top with the Indian government to see if there are ways, as issues come up, if we can address them.

So it is a process and we don’t have a defined area of what must or must not happen or where it must happen. India is a big country, there are a lot of opportunities here, and lot of interest in American businesses. I was up in Silicon Valley before going to Washington for the meetings there [during Prime Minister Modi’s visit] and I found there are enormous interests. Silicon Valley is well aware of India as a place to do business; it is also well aware of the many challenges that there have been at times in the past.

I think what Secretary Pritzker said is similar to what I am trying to say: that timing is important in life. Right now there is attention. How do you take that attention and translate that into the kinds of concrete outcomes on increase trade, increase job and economic growth.

You mentioned Silicon Valley. There is a huge issue with the IT industry here on the restriction on numbers for the U.S. on Visas to IT professionals. Will we see any forward movement on addressing that concern and was there any discussion on this?

I know that the Indian concern has been raised at a number of levels and they are well aware back there that the concerns about numerical limitations which is set by law, by Congress. President Obama has made immigration reform a priority and these kinds of issues come within the discussion of revisions that will be needed to the existing law covering visas and immigration.

I would like to say that there is a context here. First of all sitting here in Chennai, I have to point out that our consulate general in Chennai is the largest issuer of these kinds of visas — so called employment visas: the H1B and LVs — in the world. We are pleased about that. I think that when we address immigration reforms that these issues will be vetted and hopefully we will get to something that reflects today’s needs of businesses of all sides and today’s relationships. But we have an election coming up in the United States ourselves. It’s the midterms. The Congress is out of session. I am not in a position as government official representative to predict what the Congress is going to do in the new term, but I imagine that it would have to wait for the new session of congress starting in January to sort out some of these issues.

In India, the perception is that the U.S. pushes hard on issues were it stands to gain and does not give on issues that are important to India, and the visa issue is one example. It colours public perception of the relationship. Visas are an issue people get passionate about.

I do understand that. But I do think if, I may say with respect, that at times perceptions lie behind reality and the reality is that as I mentioned earlier, Indian citizens by far obtained the largest percentage of these — numerically limited by our Congress — employment visas in the world. This issue is important, not only for Indian businesses and Indian employees but for American businesses as well.

With respect to visas, more broadly over the last year, visas issuance in India nationwide by U.S. missions has grown by 20 per cent. Student visas have grown even more dramatically. In a year, we have issued more than 800,000 visas of all descriptions. Indian students number about 100,000 at any given time in the U.S. That is growing exponentially. Right now Indian students are the second more numerous after Chinese students in the United States. My own prediction is that may move to number. The trend line is obvious. I certainly understand that people might say we can do it faster, we can do it better.

I think it is particularly because PM Modi, when he was in the U.S., announced visas for U.S. nationals and there was a hope that the U.S. would reciprocate that in some way. And it did not happen. I think there was a sense of disappointment.

I think in terms of visas, I feel very comfortable with where we are we are very proud of the fact that we are able to manage this huge up tech and very welcome increase in interest in going to the U.S. And not only for study or for work but also for tourism and we are prepared to accommodate it.

We have a law that requires every visitor to the U.S. to have a visa and as long as our Congress has that law in place our job is to make sure that visa process as efficient as we can and we try very hard to do that. We are proud of the fact that the appointment time to get visa issuance happens pretty quickly, under great pressure. I actually think there is a very good story to tell there.

We welcome the fact that India has announced a little move towards visas on arrival hopefully next year. We would like to see, as PM Modi has said he wants to emphasise greater tourism, certainly more American tourists and also more students coming to India. I think it is a little unfortunate that we have so many Indian students in the U.S. and not enough American students in Indian institutions — because that really an important part building relationship. So we want to look at ways of doing that. You are absolutely right: it has to be reciprocal and we try to be reciprocal, and we are very proud of our record of our ongoing efforts here to make travel, contact with the U.S. more convenient, more accessible to more and more Indians.

The joint statement mentioned that issues of concern [on trade] will be discussed in the Trade Forum. There are concerns that U.S. pharmaceutical companies have raised about Indian patent laws. Is that going to be up for discussion as well? What assurances do you have from the Indian Government that the concerns of the US companies are going to be addressed?

What we do understand is that as a complex issue, there are a number of important interests that need to be taken into account, and [U.S. Trade Representative] Michael Froman spoke about this at the event in Washington. Again I think these are shared interests, though the weighting and the way they play out may be slightly different.

India and the U.S. have innovative, creative economies that look more and more to innovation, to research, to creation as the engines of our economic growth and job creation. We have shared interests in assuring that invention, innovation, and creativity are appropriately protected and respected.

As two countries with large public health challenges, though somewhat different ones, we have a very great interest in how we can keep our health costs under control, how to provide — I know this is a great challenge in India, as also the rest of the world — access to affordable health care. We need to work closely together to think about how we can reconcile what seem to be competing priorities in that area. That’s what I think Mr. Froman was saying. The U.S. is committed to doing and we are committed to doing in the trade policy forum and the other fora we have to address these issues. So we will do that and I think we will be able to find a way forward.

Again the public perception is that there isn’t enough appreciation in the U.S. that Indian laws have actually made available life saving drugs at cheaper prices to people that just cannot afford to pay hundreds of dollars for anti-cancer drug, and our laws can make them available for few hundred rupees instead.

I understand that. And we are very different countries. I would say that as American citizen watching the kind of discussions we have heard internally about health care, Obamacare, we do see a debate on these issues — and there is not a lot of consensus in many areas. These are very tough issues for us too, so it isn’t that we do not have an appreciation. It is one of the reasons we’re here in India. We want to report back to our policy makers in the U.S. and to our businesses what some of the concerns and priorities and interests are, and we do need to take those sensitivities into the discussions we have.

But at the end of the day, if we want to do things as two governments is to promote greater investments and the businesses themselves will decide what kind of business they can do together with what partners. And we want to create the best possible environment for that to happen and at the same time, the best possible environment to ensure that Indian consumers, American consumers and others have access to the health care they need at the prices that makes them accessible. But I agree with you. It is a very complicated issue but it is not unique with India. I spent some time in South Korea where we had deep discussions on these kinds of issues as we negotiated a free trade agreement. We are not at that point in India talking about a free trade agreement but my point is that in any robust, healthy and growing trade relationship, anytime in a robust growing and healthy economy as we saw in South Korea, there are going to be some very tough issues. But there is a way through them. There is a way to negotiate them and we have to try and empower our negotiators to come to those and recommit themselves to finding a way through. Again, having President Obama and Prime Minister Modi agreeing at the strategic level that this is hard work worth doing gives us at least the potential to move forward on these issues.

One of the big agreements of the last few years was the India-U.S. civilian nuclear agreement. But there has not been much movement on the implementation, primarily because of the nuclear liability law in India. So was there a discussion on how to move forward on the implementation?

Again there was an agreement that we would discuss this more. Diplomacy can be a slow business. But there was the agreement that we will have this discussion on how to move forward on realising the full potential of the civilian nuclear agreement. We are going to have a deepened discussion on what the U.S. can do to help support India’s entry into the relevant nuclear regulatory committees and agencies. The liability law for business poses an obstacle they say it is a very challenging one to them. So we will have to see how that plays out in terms of their discussions as well with the regulator here and with the government here and their partners.

We saw for the first time in the joint statement a specific reference to China, expressing concern over the maritime disputes in the South China Sea and the need for freedom of navigation and over flight through that region. Much was made of that reference here. Is there a perception in the Obama administration that India under PM Modi would be a more willing “pivot to Asia” than under the previous government?

My understating is that India, though a couple governments have had a Look East policy, and that Prime Minister Modi, both in his expressed policy and his actions after coming to office, with his visit to Japan, and with his hosting of Xi Jinping, hosting the Australian Prime Minister, has signalled the importance he attaches to strengthen ties — not only trade ties but ties with countries of East Asia and South East Asia. And we welcome that. We think that is part of what I said earlier — our sense of India as playing a bigger role in the region with stronger ties all round is a good thing for regional stability, world stability. We like that and I think it is consistent that with our sense of the U.S. as a Pacific power.

We want to be mindful of what we are doing, what we can do to strengthen our own ties. And we see what we are doing as complementary. We have shared interests in seeing a stable, open and peaceful trade lanes and relations, especially in the South China Sea. We have been concerned in recent years about increased tensions in that area. So I think that is an area that all the countries in the region can one, underscore — that we all have very important relations with China. In the U.S. we characterized our relations with China as having a big element of both cooperation and competition. I have heard that India has said the same thing.

It does not mean that we have identical relationships, but I think it does mean that when we look at our roles as large countries in the region, it is natural that we talk together about how we can work together to try to lower tensions, to try to increase cooperation in an area where we do feel there has been some unfortunate increase in tensions over the last few years. We have somewhat different roles in that. There is no question about that. There are various ways we can cooperate with them well. India and Japan working together is a good example of that; India and Australia; we can do some military exercises together; we can work together in multilateral fora. It is a work in progress and we…

But that statement seems to have only increased tensions. China was not very happy with that mention in the joint statement and made that known immediately. So it seems to have just increased the temperature in the region rather than tamped it down.

Let’s wait and see. Having watched this issue over the last few years the fact is while China’s rise is certainly something the U.S. has supported, played a very large role in facilitating — certainly all credit goes to the Chinese people for their determination and their extraordinary work — China has enjoyed this rapid rise and huge increase in trade not only with the U.S. but with the whole world, some of its actions have begun to worry neighbors. I think it is only appropriate that countries in the region express this. So through a process of dialogue — we have a chance to meet at the East Asia summit, and ASEAN later this year, at APEC and we will have a chance to work through these. But this is the way diplomacy needs to go. We need to be clear, not confrontational — but clear about what our concerns are.

We have suggested on the U.S. side, a code of conduct in the South China Sea. I think we can try to use our influence, and we hope that India will try to use its influence to encourage about constructive approach.

In recent days, we have seen a spike in tensions between India and Pakistan. How had you viewed those tensions, especially the call by Pakistan PM Nawaz Sharif for an international role in resolving the Kashmir dispute.

I don’t have much to add to our comment from Washington about this. When there is tension and even shooting and loss of life it’s a cause of great concern to us. We hope that we can see a return to a more stable situation and we do hope that India and Pakistan will find a way to foster the dialogue, to lower tensions and begin to build some confidence. With respect to what that dialogue is on the question of Kashmir we have a long standing policy of supporting a dialogue but making clear that we think the scope, the pace and the character of that dialogue is up to the two parties to determine.

How does the U.S. assess Pakistan’s own internal situation with respect to what is happening in Afghanistan and the U.S. withdrawal from Afghanistan how do you think Pakistan internal turbulence is going to affect that? And what role is expected of India in this [by the U.S.]?

With respect to the transition in Afghanistan we are very mindful of concerns expressed not only by the India but many countries in the region about how that transition goes. We have a lot of concern about it too. We want to see this transition move towards a stable democratic Afghanistan. We are under no illusions about the many challenges faced. In the recent election we had difficulties, but we are encouraged by the government formation.

We want to work closely with India on this and we think India brings for the future of Afghanistan not only this year and next year but beyond. We are well aware of the important and warm historical cultural ties, the model that India provides as a multicultural multi-ethnic democracy, and the support India provides to civic society in Afghanistan.

So those are areas that I hope U.S. and India will share both an interest and commitment to remain engaged. The nature of the engagement obviously changes now. With respect to Pakistan we continue to try to do anything we can to help Pakistan move in a positive direction in terms of its own democratic and government challenges to play a constructive role in the region, because it clearly is key. So we devote a lot of effort to doing that because we are going to, especially in the next few years, look at this as a regional issue. We will try to do our apart and we will do it in close consultation with India.

Courtesy: Hindu