2015 saw highest two-way Indo-US trade: Richard Verma

A: When we look at all the major categories of cooperation between the US and India, whether it is in the defence arena or clean energy or economics and trade, or all the other categories, what we saw in 2015 and 2014 is that we exceeded or broke every record in all of those categories. So, two way trade numbers were the highest ever. The number of visitors to the United States, the highest ever, 1.2 million. The number of students studying in the United States, the highest ever. So, we have really deepened and expanded our cooperation in so many areas.

Over the course of our two histories, we have pursued these independent tracks, independent economic tracks, independent security tracks, and what we have seen over the last decade, or really over the last two years in particular is that the two tracks have started to converge in a way that we have not seen before.

Q: And is that largely to do with the chemistry between President Obama and Prime Minister Modi?

A: That is a big part of it and they both have put a lot into the relationship, the President called this one of his top foreign policy priorities. There is more to it than that though. We obviously has had shared values.

Q: But we had the shared values a decade ago as well.

A: There is now an acknowledgement that we need each other economically to help power the economic growth globally, we need each other as trading partners. We need each other from a security perspective to help stabilise parts of Asia and South Asia and to be partners in counter-terrorism cooperation. We need each other to bring the latest solutions in clean energy and civil nuclear energy to population that currently does not have it. We need each other from a science and innovation point of view to continue to be the world’s best innovators.

Q: How driven is this also by the US' efforts or need to rebalance the power equation in Asia. There is no secret about China and the dominance that China has had on the global economic front especially when it comes to trading ties with US?

A: Think what you have seen as a convergence. We as you say we have had a rebalanced Asia for the last three or four years now. Two-thirds of our navy will be in Asia. We are shifting to where the people, the trade and the economics is taking place in the future and that is a reasonable focus for us. At the same time India has its act east policy. Those two intersections are coming into great convergence and we are finding great co-operation across the Asia-Pacific.

Who would have thought it possible that the US and India would enter into a joint vision statement for the Asia-Pacific where we agreed to deepen our trade and economic relationships, uphold the rule of law, co-operate militarily and from a maritime perspective in a way that we never have before. So, there is great intersection. What I would say, is that this co-operation is not directed at any third country and certainly not directed at China. It is interesting, we both have very complicated economic interdependence to China. We have robust engagement with China when we have security concerns with China we talk about them and when we have human rights concern we talk about them. But the US-India relationship very much stands on its own.Q: The roadmap for that USD 500 billion bilateral  trade target, we are nowhere close to it. What do you see as the next milestone in being able to get to that number?A: We are closer to it than people would expect. The reason I say that is because right now only about 2 percent of US exports come to India and only about 2 percent of India's exports go to the United States. So, given the size of our respective economies even if we were to increase those numbers even slightly we would make a big dent in that two way trade number.There is a lot of interest in India, it is not just interest, we are starting to see investment decisions taken but they are watching what happens on the reform front both in Delhi, they are watching what happens at individual state levels. They have seen a very good trajectory and as we continue to bring down those barriers to entry in both directions then I think that number will increasingly head towards that USD 500 billion target that our President and Prime Minister have set.Q: What do you think is holding back the investment decisions today? You said reforms and the agenda for reforms is one thing but the actual implementation on the ground is another. Do they continue to be concerned about the pace of change at this point in time?A: There have been concerns over many years and we can go through some of those indicators that are under the ease of doing business umbrella, I will say there has been good progress, when I look at just the tax category for example, tax fairness and tax certainty was certainly one of the number one issues that kept coming up.The fact that we have entered  into advance transfer pricing agreements, the fact that we have settled a 100 old tax cases, there are 100 to go, the fact that the government has taken off the table retroactive taxation, all those help bring the issue of tax fairness and tax certainty into better perspective.Q: You are saying it is no longer the number concern? Tax fairness and tax certainty is no longer the number one concern when it comes to US investors looking at India?A: I am saying it has been tackled in a way that perhaps it hasn’t been tackled in the past. We are having excellent government to government conversations and to the extent that there are lingering cases and lingering old tax cases that need to be solved, we need to do that to get more confidence into the system.However it is not just tax, it is contract sanctity, legal certainty, development of commercial courts will really help in this regard. Again when you look at what states are doing, let us say for example on a single regulatory licensing window, I think that sort of reform will really help.In 2005 there were only about 200 US companies operating here in India, that number is well over 500 companies now and employing some several million Indian workers.A big part of my job is to make sure we are attracting investment in the United States as well. What we have seen there is dramatic as well. We have gone from 50 Indian companies a few years ago to well over 200.Q: NASSCOM has put out a number saying  that Indian IT companies would be hit with about USD 400  million charge on account of the latest visa fee hikes. The totalisation agreement hasn’t gone anywhere despite the fact that both sides have been trying to sort of converge on this issue. Is there any hope that we are going to see any progress as far as the totalisation agreement is concerned and on the visa hikes specifically is there any recourse for Indian companies?A: For the first time in 2015 we entered into a discussion with the Indian government on totalisation. Our social security administration with their Indian counterparts had two really constructive meetings, let us see where they can take it. I know the President  is committed to having a really robust dialogue on this subject.On the H1B visa fees, India gets somewhat like 70 percent of all H1B visa's issued. I also understand the concern about the increase in fee that went from 2000 to 4000 and 2500 to 4500 in the case of the old ones. I also know that there is a conversation going on with members of Congress about the fee, let us see where that goes. People should also know what the fee increase was for. It was in a budget bill that was USD 2 trillion budget bill, provision that was designed to raise money for the victims' families from 9/11.(Interview transcribed by Binu Panicker and Swapnil Deshpande)