Friends, ladies and gentlemen,
Thank you for taking part in today's discussion on the subject of India and APEC.
In July 2015, the Asia Society Policy Institute formed a high-level task force chaired by its President, former Australian Prime Minister Kevin Rudd, to assess the opportunities and challenges related to Indian membership of APEC. There could not be a better choice to lead this study. Mr. Rudd brings together his considerable knowledge of and insights into the region, and understanding of the inner functioning of APEC. Today, the fruits of the Task Force study --- "India's Future in Asia: The APEC Opportunity" is before us. It outlines the benefits of Indian membership for India, APEC, and the region, the challenges and obstacles, and steps needed to address them.
I do not want to get ahead of myself; and shortly, Mr. Rudd himself will address you on the main contents and findings of the report. However, I wanted to utilize the opportunity to present our perspective - on how India views this issue.
There is no denying that the 21-member APEC forum has, over the last 27 years, transformed itself into a premier platform promoting trade and investment liberalization in Asia-Pacific. APEC economies today account for over 43% of the world's population, 57% of the world GDP and 47% of world trade.
These statistics underline the great changes and shifting balance of power to the Asia-Pacific region --- a region that India belongs to, and a trend to which among the most exciting new contributions in the last two decades has been from the rise of India. Shouldn't APEC, which came into being before India embraced globalization, recognize what has happened since then? Despite the moratorium being lifted in 2010, there has been no further expansion in its membership. For the APEC to fully realise its potential in the Asia-Pacific and the world at large, it needs to reflect 21st century realities. This would entail inclusion of economies such as India, given their economic size and potential.
As the world's third largest economy in PPP terms and the fastest growing economy; estimated to grow 7.6% in the 2015-16 fiscal, India accounts for 12% of global GDP. With its 1.25 billion population, India is home to 17% of the world's population, which offers both a large market and a gigantic workforce. According to a report by India's premier business association FICCI, India's work force will grow to 869 million by 2020 with an astounding 64 percent of the population being in the age bracket of 15-59 years by 2026, bringing large dividends to the Indian economy if skilled appropriately. India is, therefore, a very attractive partner for any economic grouping to have on board.
In terms of India's trade and investment linkages with the rest of the world, no other geographical region is as closely integrated with India than the Asia-Pacific. India's commitments in South-East and East Asia have been substantial; seeds for which were sown with the 'Look East Policy' in the early 1990s. We proactively engage with virtually all the major regional forums in the Asia-Pacific region, notably the ASEAN-India Summit, the East Asia Summit, the ASEAN Regional Forum (ARF), the ASEAN Defence Ministers Meeting Plus, the Expanded ASEAN Maritime Forum (EAMF) and the Regional Comprehensive Economic Partnership (RCEP) negotiations. India also maintains close political and strategic ties with many APEC members.
In fact, the APEC appears to be the only forum pertaining to the region of which India is not a member. India's 'Act East Policy' envisions increased cooperation in trade, investment, infrastructure development, connectivity, capacity building and strengthening people-to-people contacts in the region, which can reinforce goals shared by APEC.
India already finds common ground with APEC's initiatives such as the ongoing objective of making it 25% easier to do business, with a particular focus on four key areas, which are, starting a business, receiving credit, trading across borders and enforcing contracts. The Indian Government under Prime Minister Modi seeks to improve the country's ranking on the World Bank's 'Ease of Doing Business' index. Similarly, the 'Make-in-India', 'Digital India', 'Clean India' and 'Start-Up India' initiatives require a business friendly environment. India is preparing for these, as is evident in the recent labour reforms which aim to create a more attractive and efficient business environment. As India strives to transform itself into a global manufacturing hub, India recognises the value that it will gain from greater involvement in regional production and supply chain networks, which APEC can offer.
In the 15 areas identified by the Osaka Action Agenda (OAA) of the APEC, India has shown progress that is comparable to several APEC economies. For instance, India has launched several initiatives for simplification of customs procedures; reduced the average tariffs on agriculture and non-agricultural products; liberalized FDI caps in the insurance, air services, railways, defence, e-commerce and construction sectors etc. On the government procurement front, India's policies are transparent and comparable to some of the APEC countries. As far as intellectual property is concerned, the government is already working on a new IP policy which will further streamline India's IPR regime.
Other benefits of a formal engagement between India and APEC would include reduction in transaction costs of doing business as well as greater harmonization and mutual recognition of standards, professional qualifications and other soft infrastructure.
Thus, membership of APEC will certainly benefit India, but the gains for APEC and the world economy will also be considerable. India has extensive and expanding trade and investment relations with APEC economies, which account for 35% of India's merchandise trade, 27% of FDI inflows, and 40% of FDI outflows. As India undertakes further economic reforms and sets the next generation of the liberalization process into motion, there is a golden opportunity for India and forums such as APEC to benefit from deeper engagement. India's size and role as a key regional and global player, as well as its maritime location at the western gateway to the Asia-Pacific region, points to the enormous untapped potential that can be realized between India and APEC in terms of trade and investment.
In acknowledgment of India's important role in driving global economic growth, in July 2014, Chinese President Xi Jinping, during the BRICS Leaders' Summit in Brazil, invited India to attend the APEC meeting in Beijing in November 2015. India's case for membership has also received positive articulations of support during the Foreign Ministers Meeting of Russia, India and China (RIC) in Beijing in February 2015. We see the U.S. as a very critical partner in realizing the goal of making India's APEC membership a reality --- reflecting the same vision of Asia-Pacific and the Indian Ocean Region that were well-documented in the joint vision statement issued during President Obama's visit last year.
Today Asia is witnessing a consolidation of competing mega regional trade agreements -the US led Trans Pacific Partnership (TPP) agreement, the Regional Comprehensive Economic Partnership (RCEP), and APEC promoted Free Trade Area for the Asia Pacific (FTAAP). While India is part of RCEP, it is not involved in TPP or FTAAP. Yet, India has already become a 'strategic partner' of several APEC member countries and all, but four, APEC member countries already have or are pursuing trade agreements with India bilaterally or multilaterally, including China. India joining the APEC forum can bring India's economic integration with the region to a level matching its strategic partnership with the APEC members and groups like ASEAN.
India's participation in APEC could help consolidate India's quest to speed up growth and to integrate closer with its neighbouring Asia-Pacific economies. It can also help India become familiar and more involved with the sweeping changes taking place in the region towards reducing transaction costs, improving connectivity and supply chain linkages, strengthening human capital development, and building sustainable and inclusive communities.
India represents a politico-economic opportunity for APEC as a G20 country and member of the East Asia Summit and RCEP, whose economic and political weight is bound to increase in the coming years. We believe that India could play an important role within APEC for growth, development and stability of the region. In turn, membership of APEC would help India in integrating further with economies of the region, resulting in a win-win situation for all.