ADDRESS GIVEN BY MR. G. L. MEHTA AMBASSADOR OF INDIA TO THE UNITED STATES AT THE SOUTH ASIA SESSION OF THE FAR EAST CONFERENCE OF THE FAR EAST-AMERICA COUNCIL OF COMMERCE AND INDUSTRY, INC. ON FRIDAY MORNING OCTOBER 9TH, 19563 IN THE W

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00423R001100190005-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: November 16, 2016
• Document Release Date: October 21, 1999
• Sequence Number: 5
• Publication Date: October 9, 1953
• Content Type: SPEECH

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FAR EAST-AMERICA COUNCIL
OF
COMMERCE AND INDUSTRY, INC.
NOT FOR REL=ASE
BEFORE 11:45 A.M.
FRIDAY OCTOBJR 9TH
ADDRESS GIV 1N BY MR. G. L. MEHTA
AMBASSADOR OF INDIA TO THE UNITED STATES
AT THE SOUTH ASIA SESSION OF THE FAR EAST CONFERENCE
OF THE FAR EAST-APIERICA COUNCIL OF COM'IL CE AND INDUSTRY INC.
ON FRIDAY MORNING CCTOBI 9TH, 1953
IN THE 14ALDORF-ASTORIA HOTEL
Nh71 YOR'~ CITY
"INDIA AND THE UNITED STATES - SOME ASPECTS OF ECONOMIC
COOPERATION"
Al
Mr. Chairman, Ladies and Gentlemen:
I recall with pleasure that I was privileged to address
this distinguished gathering last year about this time. I
appreciate, therefore, all the more your kind invitation to speak
to you at the South Asia Session of this year's conference.
I propose to confine my remarks to some aspects of economic
cooperation between the United States and India - India as an
integral part of South-East Asia. Economic cooperation is by no
means a novel idea and in one form or another such cooperation has
been increasing during the last half a century, Nevertheless, the
world is only gradually realizing how vitally the stability and
prosperity of any one country depend on the conditions and develop-
provppod-Re1 # '200 4MOs:,CI&4W aet00'i2i0@6d0@l9opOE34ical and
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economic dissimilarities.
Fortunately, the long-range objectives of the United States
and countries in South East Asia such as India, Pakistan, Burma,
Ceylon and Indonesia, are in broad harmony even if their immediate
needs and problems may be different. India's primary objectives,
for instance, are the establishment of a firm basis of economic
growth and viability, raising standards of living which are woe-
fully low and diversification of a predominantly agricultural and
primary producing system which should have flexibility to adapt
itself to dynamic economic factors. All this is in conformity
with the wider interests of the United States whose security
and material welfare are bound up, in the ultimate analysis, with
stable, productive economies elsewhere. The United States and
other highly industrialized countries are dependent on foreign
sources of vital raw materials for their industries operating at
high levels of production. It is, therefore, essential that these
sources should be explored and developed if the industrial economies
of countries like the United States are to be maintained and
strengthened. We had an inkling of the problems involved in
procurement and supply of raw materials during the Korean war when
it was found necessary to set up an International Materials Confer-
ence for rationing of important raw materials as an emergency
measure. Without the coordinating efforts of the Conference,
several industries in different parts of the country, including
the United States, would have been sorely pressed to meet their
defense and civil commitments while others would have suffered
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from an overabundance of materials. Utilization of such raw
materials and expansion of their production, provided it is done
without any tinge of economic exploitation or political domination,
would be in mutual interest. To the industrialized countries it
would ensure sources of materials which could be steadily available
and would be capable of expansion. For the underdeveloped
countries it would mean greater foreign exchange earnings which
could be utilized for purchase of machinery and equipment needed
for economic development and it could also secure technical and
physical development of an important sector of the domestic
economy.
I must, however, enter one caveat here. From what I have
said it must not be inferred that the primary producing and
economically backward countries should concentrate exclusively
on the development of exports of raw materials. Indeed, one of
the fundamentals of development of such countries is a diversifica-
tion of their economies so as to reduce their dependence on the
production and exports of one or two commodities and to enlarge
their avenues of employment. ?'Te have to see that a national
economy like Indiats, for example, does not get out of balance
and is not subjected to violent fluctuations because of variations
in the prices of primary commodities which, as you are aware, are
the most volatile of all prices. You pill also appreciate that
exports of such primary -_,roducts are also exposed now-a-days to
the serious risk of elL ination through synthetic production in
industrialized countries. The case of Chillian nitrates is, of
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course, classic. But similar have been the risks for other
commodities like rubber or mica or shellac while the rapid
development of plastics has also affected several raw materials.
The instability resulting from such competition has been and
would be seriously deterimental to the economies of underdeveloped
countries. Production and exports of raw materials must, in other
words, grow with the rest of the economy and must be supported by
the ancillary forces of industry, power and transport which in
themselves provide resilience and a stronger framework for with-
standing trade cycle fluctuations.
This, then, is the broad basis of economic development for
countries like India. In my address to this assembly last year,
I surveyed our Five Year Plan in some detail and I do not wish to
repeat myself to-day. I shall only say this. The main burden of
the cooperative effort to attain economic stability and achieve
agricultural and industrial progress rests and must necessarily
rest upon India herself. The sacrifices and national discipline
involved in a projected development outlay of 4.3 billion dollars
in a period of five years is considerable in view of the very low
income levels of the people and the consequent limitations on the
possible rate of saving. In fact, out of this total capital outlay,
the amount of foreign assistance visualized is in the neighbourhood
of 25 percent so that nearly three-quarters of the total expendi-
ture of the Plan is to be undertaken by the nation itself through
additional taxation, borrowing and even deficit financing under
proper safeguards. Already, during the last two years, foreign
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grants and loans extended to India amount to about 380 million
dollars which include loans from the International Bank, the U.S.
Food Loan, assistance under the Indo-U.S. Technical Cooperation
Agreement, aid under the Colombo Plan and other forms of assistance
from such bodies as the Ford and the Rockefeller Foundations.
Other underdeveloped regions are in a similar position and their
peoples are fully aware of the fact that their economic salvation
must eventually depend on their own effort, determination and
vision. But they also recognize that international cooperation
in the widest sense is a crucial factor and they are accordingly
seeking ways of assisting each other towards the common goal. I
might add that India is giving economic and technical aid to her
neighbours in a limited form consonant with her own capacity,
chiefly in the nature of technical training and agricultural
research services and receives similar help in return. The
sphere of this regional cooperation will enlarge significantly
in future both in the technical and commercial spheres.
The fundamental problem of an area that is in a process of
industrialization and economic development is to overcome the
serious handicaps imposed by dearth of capital, capital equipment
and technological knowledge and experience. In theory, capital
goods may be earned by increased exports but this only begs the
question as to how exports are to be expanded without heavy
capital investment in the industries concerned. There is a vicious
circle which can be broken by the initial absorption of certain
measure of foreign capital. It is pertinent to emphasize this
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point in the present discussion if only because the United States
is now the major source of investment c T ital and accordingly
could express her policy of international cooperation in that
form. It is true that a certain "investment climate" or an
"investment psychology" is a prerequisite for stimulating the
flow of private capital abroad. Undoubtedly, the creation of
such "climate" can be assisted through relief in taxation,
guarantee of non-discrimination, facilities for remittance of
dividends and profits and repatriation of capital., exchange
convertibility and the like. But such "climate" is not less
complex than New York weather; it cannot be brought about only
by statements of policies or legislative measures. It is funda-
mentally a question of confidence which can only grow by working
together.
There is, however, one thought I would like to leave vi th you.
It is true that domestic investment opportunities in the United
States and its neighbouring countries like Canada are so attractive
that the risks of investment in far-off countries do not always
seem trorth undertaking. The attitude is understandable provided
that full facts regarding the possibilities of development at home
and abroad are fully known and understood. It is essential that
whatever judgment is made is on the basis of a knowledge of market
and investment conditions so as to determine the comparative
advantages of branching out in India or in other regions. This
cannot be done without considerable outlay in surveying the field
and analyzing conditions of raw material and market, local cost of
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production and labor conditions. There is, moreover, nothing to
induce such firms to expend large sums on market and industry
research abroad unless their first have reasonable anticipation
of success.
I wonder whether it would not be possible to rely on the
services provided by an organization which could give basic data
in detail to firms and investment houses interested in placing
capital in the underdeveloped regions. It would also seem
desirable to establish some kind of machinery through such a body
as yours with a committee of leading industrialists, bankers and
business men in India for exchange of information and views and
for exploring definite lines of collaboration and cooperation.
The main purpose would be to fill an obvious gap in economic
intelligence. Similar institutions operate in the domestic invest-
ment field and the idea could be developed so as to establish a,
large-scale foreign investment advisory organization in this
country.
We have heard for some time now the doctrine of "trade, not
aid." I do not wish to enlarge upon this theme here but it is
necessary to point out that apart from the fact that these two
are not mutually exclusive or conflicting objectives, there is a
third line of international economic cooperation and that is
investment of capital, both public and private. If the immobility
of private capital in prosperous countries continues to be a serious
problem for the underdeveloped regions, we have to explore ways
and means of obtaining such foreign assistance as is necessary
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through institutions like the International Bank, schemes like
the Colombo Plan and agencies of important Foundations. Time
is the essence of the whole problem and the economic development
of poorer countries cannot be made to wait indefinitely. Such
assistance must, however, be for specific purpos:s and fully
integrated with development plans of the countries concerned
which should be well conceived and properly administered.
One final word. India, on her part, is sparing no effort
to reach the level of economic development which will enable her
to stand as a bulwark of democracy in these times of change and
uncertainty and which will assist her in playing her part in
international economy. We in India value friendship with the
United States whose technical and economic assistance has been
a vital factor in international reconstruction and development.
We cherish this friendship all the more because we feel that we
can and must cooperate for preservation of those institutions and
ideals which we both hold essential for our common good as well as
for the welfare of mankind.
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