Welcome Speech by Mr Yogendra Kr Modi, President-Elect, FICCI

• Mr Kenneth Juster, Under Secretary for Industry and Security, US Department of Commerce
• Mr Kanwal Sibal, Foreign Secretary, Government of India
• Mr Robert O Blake, Charge' de Affairs, Embassy of the United States of America
• Mr Onkar S Kanwar, Vice President, FICCI
• Dr Amit Mitra, Secretary General, FICCI
• Shri Rajeev Shukla, Member of Parliament & Convenor of the Indo-US Parliamentary Forum
• Distinguished Participants from the US and Indian Governments
• Members of the USIBC Executive Mission and

Friends,

It is indeed a special occasion today for me to welcome this august gathering to the Federation House to interact on the issues arising out of the process of globalization, of knowledge driven industries. At the outset, I would like to thank Mr Kenneth Juster, who warmly accepted our invitation to deliver the Keynote Address and our gratitude to Mr Kanwal Sibal for agreeing to deliver the special address.

Today the relevance of the US-India relations has gone much beyond the measures of statistics of trade and investment between the two countries. It is now driven by the interests of two natural allies, attempting to find a new rhythm to match each other's national interests. We are focusing on confidence building measures to partner with each other deeply, in a complex world. Our two great democracies and pluralistic societies are under attack from similar forces and from similar counter values. It is in this new historical and geo-political context, that US and India are beginning to cooperate seriously in areas of hi-tech research, intelligence, defence and the security sector. This, undoubtedly is reflected in a major initiative through the High Technology Cooperation Group. The second meeting of HTCG was just completed yesterday in Bangalore where CII, FICCI and NASSCOM played a seminal role. Mr Juster, I assure you of FICCI's deepening engagement under my presidency next year.

It is clear from the facts and analysis that there is an ever-expanding shortage of human capital, embodying advanced knowledge, the so-called knowledge worker of the 21st century. It is said that the developed world alone will need 40 million more knowledge workers. This is a staggering number indeed, and India could undoubtedly be a major supplier, in sync with the USA.

Realizing the new trend in economic prosperity, through the knowledge driven industries, FICCI jointly, with its US counterpart - USIBC, has entered into a Knowledge Protocol, which came out earlier with an outstanding report entitled the Knowledge Trade Initiative. The Report assessed in-depth sectors and policies, needed to ensure the future of our partnerships. I believe, Mr Juster, you have perused over this report with interest. We are updating this comprehensive work in the new context.

India has already produced tremendous growth during the 1990s, where the service sector, was the fastest growing, at an annual growth rate of 7 per cent, with services contributing more than 50 per cent to the Indian GDP, and employing approximately 25 per cent of India's massive work force. Amongst the various service sectors - commerce, telecom and financial services are seen as the fastest growing sectors, accounting for more than 30 per cent of total sales, and their profitability has grown at an annual rate of approximately 8 to 10 per cent during the 90s and into this decade.

Today's discourse is vital in understanding the limits, which should be or should not be applicable to knowledge, especially in the context of its high end applications and sensitive uses. India has definitely benefited in liberalizing these industries and gained competitive advantage by creating and sustaining superior performance. There is also a growing confidence in India as it emerges as a destination for innovation and value addition. India is simultaneously emerging as an R&D hub, in partnership primarily, with the USA. Offshore outsourcing from India has found many willing MNCs including the Fortune 1000 companies. Back offices are functioning as the backbone of several companies such as GE, Honeywell, Intel, Motorola, Yahoo, amongst others. Similarly, Indian companies in the knowledge domain have begun to put their foot prints on the US soil. Globalization of knowledge driven industries is no more a pipe dream, but an emerging reality. I may say that untapped potential is still available in areas such as manufacturing, transportation, direct marketing and utilities.

Indeed, we need to discuss as to how best we can reach greater heights and develop a policy framework that will drive value creation and competence, complementing both our economies.

• India is the third largest recipient of venture capital in Asia with the US firms providing needed capital and Indian firms supplying skilled personnel and innovations. Yet there are concerns pertaining to freer movement of capital, resources and people.
• Fostering deeper defense cooperation focusing on moving beyond technology transfer constraint, can unleash yet another area for enhancing US-India partnership.
• Indian workforce is described as one of the highest quality work forces in the world.
• India's telecommunication costs are competitive with those in the US today.
• There are good prospects of joint development with India's IT industry in creating, embedded software products, media design and e-banking.
• Impediments in the Indian market include the lack of Beta Sites, lack of risk capital, restrictions to the movement of capital, and the much awaited capital account convertibility for which preparations are on systematically.
• The issue of out-sourcing and movement in the US to limit the freedom of US companies to out-source from India has caused substantial concern. Such retrograde efforts, if brought to fruition, would hamper hi-technology cooperation, cooperation in research and development in sensitive areas such as bio-tech, life sciences, space sciences and nano-technology.

I conclude with a sense of optimism. I am aware of the pivotal role played by Mr Juster and Mr Sibal in this remarkable domain of cooperation. FICCI strongly offers its massive countrywide platform in the service of Indo-US partnership in this 'brave new world'.

Thank you!