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Remarks by Ambassador Nirupama Rao at the Inaugural function of the US-India Aviation Summit at Hotel Grand Hyatt, Washington DC

October 30, 2013

Hon’ble Mr Ajit Singh, Minister of Civil Aviation, Government of India;
Hon’ble Mr Anthony Foxx, Secretary, US Department of Transportation;
Hon’ble Ms Leocadia Zak, Director, US Trade and Development Agency;
Distinguished Guests, Ladies and Gentlemen.

1.      I am delighted to be present here today, at the inaugural session of the U.S-India Aviation Summit, 2013.  The summit will deepen further the existing co-operation, in civil aviation matters, between the two countries, by focusing on issues such as new air traffic management technologies, aircraft environmental issues, and expansion of aviation infrastructure.   On this occasion, I would particularly like to commend the U.S Trade and Development Agency (USTDA), on the U.S side, and the Ministry of Civil Aviation, Government of India, for having worked together over the past several months to organize this ambitious program.  
2.      The Civil Aviation services, in India, have expanded rapidly with the opening up of domestic skies to private carriers, and through large scale public private partnership (PPP) investments in airport infrastructure.  The civil aviation sector contributes significantly to development by generating employment opportunities – both direct and indirect - besides facilitating enhancement of productivity and efficiency in the movement of goods and services.   During the five year period, commencing April, 2012, the domestic traffic – both passenger and cargo – is projected to grow at an annual average growth rate of around 12 %, while the corresponding international traffic is expected to grow at around 8-10% per annum.   In order to create infrastructure and services, which will support this ambitious traffic growth, an investment of nearly U.S $ 15 billion is projected over this period, from public and private sources.  The Indian civil aviation market is expected to be the world’s third largest by 2020, surpassing 450 million domestic passengers.  
3.      With these ambitious plans as backdrop, there is plentiful opportunity for meaningful collaboration between U.S and India in the civil aviation sector.  Some of these areas relate to development of Greenfield airports, using innovative financing models;  seamless integration of security mechanisms with the transport infrastructure of airports;  upgradation of air traffic management (ATM) – communication, navigation and surveillance (CNS) services;  capacity building of civil aviation organizations in India;  co-operation in setting up of the proposed National Aviation University;  and, operation and management of airports, with a view to enhancing automation, reducing dwell times, and making customs and immigration procedures more efficient and user friendly.  
4.      The Domestic Air Transport Policy approved by Government of India provides for foreign equity participation up to 49 % and investment by non-resident Indians (NRIs) up to 100 % in the domestic air transport services. With a view to attracting new technology and management expertise, we have recently permitted up to 49 % Foreign Direct Investment (FDI) by foreign airlines in Indian airline companies.  This relaxation has yielded positive results, and we are witnessing strong interest by global airline majors in investing in joint venture operations with Indian partners.  Thus, strategies for enhancing foreign direct investment (FDI) flows from US into the Indian civil aviation sector should also be explored.  
5.      I am happy to note that these and other relevant and important issues would be discussed in depth and detail during the next three days.  I am confident that the discussions will yield more opportunities for collaboration, which will benefit both our countries.  
6.      Turning to the broader context of the relationship between U.S and India, we have been witness to a transformation, over the last decade, which is truly extraordinary.  The partnership between our two countries  has matured over time and spans multiple areas of human endeavor, ranging from defense, homeland security and civil nuclear co-operation, on one hand, to energy, health and education, on the other.  The Joint Statement which was issued, after the recent meeting between President Obama and Prime Minister Manmohan Singh, is testimony to the robustness of a partnership, between two countries, which are natural allies, on account of shared traditions of democracy and rule of law.  The relationship, which spans nearly 30 dialogue mechanisms, has been described by the Hon’ble Prime Minister of India, Dr Manmohan Singh, as one which is “...founded on many pillars, based on pragmatism and principle, and strengthened by shared values and common interests...”.  President Obama has characterized the India-U.S. partnership as one of the most significant, indispensable and defining partnerships of the 21st century.
7.      The trade and economic partnership remains a central pillar of our expanding bilateral ties. The annual two-way trade in goods and services is more than U.S $ 100 billion, while the total two-way foreign direct investment is nearing U.S $ 30 billion.  India is now the third-fastest-growing source of foreign direct investment in the U.S, and the U.S is among the top five of India’s preferred FDI destinations. The growing flow of capital from India has created thousands of jobs in the U.S along with business partnerships and technology tie-ups.  “People centric” linkages  are changing the landscape of our relationship.
8.      It is true that concerns are expressed in the United States about the pace of reform in India.  We are sensitive to these concerns, as we value our investment and trade ties with the U.S.  Government of India has placed utmost priority to improving the investment climate in the country by taking concrete steps to enhance growth, while restoring macro-economic stability to the economy.   The fiscal deficit has been reduced sharply while the current account deficit is being contained through a combination of export enhancing and import compression measures;  the Indian Rupee has rebounded and is the strongest performing emerging market currency in recent weeks;  the foreign direct investment (FDI) regime has been progressively liberalized;  transfer pricing rules have been rationalized and made more investor friendly;  the preferential market access (PMA) policy for the private sector has been kept in abeyance; and, formal negotiations have been resumed between US and India on a common Bilateral Investment Treaty (BIT).   Our Prime Minister, while addressing a group of U.S business leaders in New York last month, has noted, “....we have an abiding commitment to fostering an economic environment that is open, predictable and transparent, and which is business and investment friendly...we are determined to restore the high momentum of growth of the past decade and maintain macroeconomic stability...we also know that achieving this means more and not less reforms....”.  The strong measures taken by our Government have yielded concrete, tangible results and the total FDI flows into India, in the first quarter of the current financial year were U.S $ 10.48 billion, compared to U.S $ 8.16 billion in the corresponding period of the last year.  
9.      The trade and economic partnership will continue to be one of the central drivers of the India-U.S relations. India’s sustained economic growth with its paradigm of encouraging foreign trade and investment, our focus to make India a global innovation hub, our ambitious plans for modernization of infrastructure requiring more than one trillion dollars in the next few years, and the focus on developing new industrial clusters, offer new and exciting opportunities for the U.S businesses to partner with Indian stakeholders for mutually beneficial ties.  Similarly, Indian businesses are creating value, wealth and jobs in the U.S.  A recent study of 68 Indian corporations, which have invested in the U.S, estimates that the collective investments of these companies amount to around U.S $ 17 billion;  and, about one-third of the companies actively engage in Research and Development (R&D), having spent over U.S $ 340 million in R&D activities, thus contributing to innovation in the U.S.   
10.    In a relationship as wide in scope as India-U.S strategic partnership, it is very natural that we would not have the same views on all the issues or our approaches on a particular issue might differ.  But we need to engage with each other without losing sight of the broad, long-term strategic goals of this relationship, and the win-win potential of this relationship while remaining adequately sensitive to each other’s interests. I am confident that these principles will guide the discussions of the Aviation Summit.  As we discuss threadbare the opportunities for making the U.S India relationship in the civil aviation sector more robust and sustainable, we would do well to remember that a relationship forged on the anvil of shared interests, values and concerns, is the best guarantor of progress and reward.  
Thank you