India's trade reforms and investments in math and science education have resulted in tremendous growth and prosperity over the past decade, according to U.S. Export-Import Bank (Ex-Im) Chairman Philip Merrill.

In remarks delivered during a three-city tour of the subcontinent February 3-6 Merrill stated, "The reform policies of the last 10 years, in fact, have been the greatest anti-poverty program in Indian history."

Commenting on his four decades of work with India, he said, "I cannot help but reflect on India's profound, and positive, changes. Although India faces geopolitical and social challenges -- as all great nations do -- the Indian economy continues to grow at a blistering pace of 6 to 7 percent per year. I hear that this year it might be 8 percent."

Merrill visited the South Asian nation in an effort to highlight opportunities for Indian companies to benefit from advanced technology U.S. exports. "The United States -- and the Bush Administration, in particular -- is committed to deepening the cooperation, friendship, and economic and strategic partnership between our two countries," he said.

Merrill noted that the Ex-Im Bank has identified information technology, pollution-control equipment, medical equipment, and airport and ground-support equipment as areas in which U.S. exports could be of particular value to Indian industry.

Explaining the function of the U.S. government funded Ex-Im Bank, Merrill said, "We offer financing to help foreign buyers of all sizes -- small, medium, and large -- purchase advanced goods and services to grow their businesses, capitalize on new technologies, and enter new markets."

"Throughout the world, Ex-Im Bank can offer favorable credit terms to international buyers, and provide longer repayment terms where they otherwise would be unavailable," he said.

FEBRUARY 6, 2004
Contact: Andrew Yarrow (202) 565-3200

EX-IM BANK CHAIRMAN CONCLUDES THREE-CITY TRADE MISSION TO INDIA

Philip Merrill Highlights Availability of Ex-Im Bank Financing

NEW DELHI, INDIA - The Export-Import Bank of the United States (Ex-Im Bank) can help Indian companies finance the purchase of U.S. exports, Bank Chairman Philip Merrill said during a trade mission to India this week that included meetings and speeches in Mumbai, Chennai, and New Delhi.

"Ex-Im Bank offers financing to help foreign buyers of all sizes - small, medium, and large - purchase advanced goods and services to grow their businesses, capitalize on new technologies, and enter new markets," Merrill said in a speech to Indian business, banking, and government leaders. "These are some of the reasons it is in India's interests to leverage its borrowing capacity to buy more from the United States."

Merrill met with Indian and U.S. business leaders as well as leaders of the Reserve Bank of India, Indian Ex-Im Bank, and the Industrial Development Bank of India in Mumbai on February 3 and 4. Merrill met with information technology executives in Chennai on February 5, and with India's finance minister and business leaders in New Delhi today.

Ex-Im Bank has more than $1 billion in exposure in India. The Bank's financing has helped Indian companies such as Jet Airways purchase commercial aircraft, Indian Oil Corporation buy equipment and services for a petrochemical refinery, and a number of Indian information technology companies purchase U.S.-made software.

Ex-Im Bank this year marks its 70th year of helping finance the sale of U.S. exports, primarily to emerging markets throughout the world, by providing loan guarantees, export credit insurance, and direct loans. In fiscal year 2003, Ex-Im Bank, an independent federal agency, authorized financing to support $14.3 billion of U.S. exports worldwide. For more information, visit www.exim.gov.

The Honorable Philip Merrill

President and Chairman
Export-Import Bank of the United States

India -- Full-Text Remarks
Mumbai, Chennai, and New Delhi, India, February 3-6, 2004

Thank you for your kind introduction. When I was in India for the State Department in the 1960s, the principal issues that concerned us were India's relationships with Communist and other third-world governments and how the green revolution promised to relieve India's seemingly eternal problems with extreme poverty and malnutrition.

Even in the late 1980s, when I last visited India, we might trot out the old saw about the relationship between "the world's two largest democracies," but basically India was still a small component of the emerging global economy.

What a difference a decade or so has made! Although India's transformation is often overshadowed -- unfairly, I might add -- by China's market revolution and growth, the Indian economy today is booming and India is proudly marching forward into the 21st century.

While I am here today on behalf of the Bush Administration and I am privileged to represent the Export-Import Bank of the United States, I cannot help but reflect on India's profound, and positive, changes. Although India faces geopolitical and social challenges -- as all great nations do -- the Indian economy continues to grow at a blistering pace of 6 to 7 percent per year. I hear that this year it might be 8 percent.

This is raising living standards, creating a vast new middle class, and stimulating domestic demand for all the accoutrements of economic development -- from infrastructure projects and capital equipment for manufacturing to transportation equipment and consumer goods. The reform policies of the last 10 years, in fact, have been the greatest anti-poverty program in Indian history.

Since India launched its reform program in 1991, many state-owned enterprises have been privatized, tariffs have been reduced, India's trade regime has become more transparent, and the regulatory environment has improved with the passing of the permit raj culture.

At the same time, India has developed a world-class banking system, and its stock and commercial paper markets have become increasingly liquid and attractive. In addition, a number of Indian companies are manufacturing products and parts for U.S. companies such as Ford, and there has been phenomenal growth in software, call centers, and other services.

India's investment in science and math education, and its management talent, combined with its low costs, is rapidly creating a new, industrialized India that will be extremely competitive in the global economy.

Of course, India needs to continue its structural reforms, bring down its deficits and interest rates, and expand its infrastructure investment. But one could say the same thing about the U.S. Still, there is no escaping the remarkable progress of the last 10-12 years.

Another important change has been in the nature of U.S.-Indian relations. While this relationship had its ups and downs during the Cold War, the United States -- and the Bush Administration, in particular -- is committed to deepening the cooperation, friendship, and economic and strategic partnership between our two countries. As President Bush said just last month, our strengthened bilateral "cooperation will deepen the ties of commerce and friendship between our two nations... [Our] relationship is based increasingly on common values and common interests. We are working together to promote global peace and prosperity."

Before the slowdown in global trade in the last few years, U.S.-Indian trade had increased by 50 percent in the preceding four years, and the United States is India's largest bilateral trading partner. Indian exports -- of traditional goods such as textiles and gems, as well as new information technology services and products -- as well as imports have both been experiencing strong growth.

Moreover, many non-resident Indians and Indian emigrants have been very successful founding and leading U.S. businesses. They are a valuable resource for both India and the United States, creating an economic and political bridge between our two countries. In the Washington, D.C. area, where I live, the South Asian Business Council is a very mighty force.

One of the great success stories of USAID during the last 50 years has been its efforts to help the five Indian Institutes of Technology get up to speed and to improve Indian higher education. I am delighted to see India's successes and involvement in the hard sciences. I understand that McKinsey, the world's number one consulting firm, recruits heavily from the IIT system.

However, for an economically dynamic country of a billion people, Indian commerce has a long way to go. U.S.-Indian trade is just one-tenth of what U.S. trade is with China, and it ranks just behind our commerce with Switzerland, a country of 7 million people. In short, the Indian market for U.S. exports has tremendous potential for growth.

Given our 2:1 trade relationship -- we buy twice as much from India as it buys from the U.S. -- while we are happy to purchase India's exports, where it makes economic sense, we also want to sell more to India.

There are a number of key sectors that we have identified as particularly ripe for U.S. export growth. These include information technology, pollution-control equipment, medical equipment, and airport and ground-support equipment.

Helping to realize this potential is where Ex-Im Bank comes in. For those of you who may not be familiar with Ex-Im Bank, let me say a few words about what we do. We have three criteria: We support purchases of U.S. goods and services by companies in the developing world. We require a reasonable assurance of repayment. And we only go where private capital will not go alone.

We are open in 150 countries including, of course, India. In India, we are open for short-, medium-, and long-term transactions. We offer financing to help foreign buyers of all sizes -- small, medium, and large -- purchase advanced goods and services to grow their businesses, capitalize on new technologies, and enter new markets. These are some of the reasons why it's in India's interests to leverage its borrowing capacity to buy more from the United States.

Ex-Im Bank brings great expertise to every kind of export financing -- from oil and gas equipment and technology and large commercial aircraft to power projects, machinery, engineering services, medical equipment, food, and consumer goods. You name it. We finance it.

Throughout the world, Ex-Im Bank can offer favorable credit terms to international buyers, and provide longer repayment terms where they otherwise would be unavailable.

Because we lower the risk of financing, we can significantly lower the cost of financing. Commercial banks benefit from our financing because we take away the risk so that they can charge more competitive rates. With the moderation in the value of the U.S. dollar against the Euro, the pricing of U.S. products -- as well as the cost of our financing -- is very competitive.

We offer loan guarantees, export credit insurance, working capital guarantees, and structured trade finance -- including limited recourse project finance.

Ex-Im Bank also offers special treatment for U.S. exports of environmentally beneficial goods and services, medical equipment, and transportation security products and services. For these products, we offer special extended repayment terms.

We have a 70-year track record of developing creative solutions, even for the most challenging financing needs. Our stock-in-trade is to go where commercial banks won't go, to shoulder risks that the private sector will not take on. Every transaction that approve must meet our requirement of reasonable assurance of repayment, but Ex-Im Bank takes risks where others fear to tread.

A good example are our new initiatives to support U.S. exports to Iraq. At Ex-Im Bank, we have been working hard to devise ways to help the Iraqi people rebuild and develop a sustainable, diversified economy. We already have three ways of financing Iraqi reconstruction -- 1) short-term credit insurance through the new Trade Bank of Iraq; 2) third-country guarantees; and 3) working capital guarantees for U.S. subcontractors.

Ex-Im Bank is not a development bank. We are a $100 billion institution -- an export credit agency with $60 billion in outstanding exposure, and $40 billion of unlent capital. We'd like to use as much of that as possible for any business deal in India to support exports of U.S. goods and services that meet our three criteria.

Currently, Ex-Im Bank has more than $1 billion in exposure in India. However, like overall U.S. trade with India, we should be doing, and want to do, more.

During the past few years, we have done several major deals with Jet Airways, authorizing more than half a billion dollars to support its purchase of a number of Boeing commercial aircraft.

Last summer, Ex-Im Bank provided a $75 million loan guarantee for Indian Oil Corporation to support the export of U.S. technology, equipment, and services to build a petrochemical refinery in Panipat City. The plant, when completed next year, will produce petrochemicals used in manufacturing plastic containers, artificial fibers for man-made fabrics, and other plastic products. We see a great opportunity for expanding this credit guarantee facility with Indian Oil.

We have also supported transactions with India's IT sector that have benefited high-tech U.S. companies as well as ones in India. For example, we helped Eonour Technologies Limited purchase U.S.-made procurement software, Helios & Matheson Information Technology obtain trade-management software, and Pentamedia Graphics buy multimedia hardware, software and digital video equipment.

In each case, Ex-Im Bank facilitated direct transactions between two of the most important IT hubs in the world -- Silicon Valley, California, and Chennai.

Fundamentally, we believe that the Indian IT sector will continue to grow and prosper -- and we see it as our job to make sure that this sector continues to make major equipment and service purchases from the United States.

Other recent transactions that we have supported have run the gamut from ones involving construction equipment and pharmaceutical supplies to manufacturing equipment to support India's growing manufacturing sector.

Yet, as these examples show, Ex-Im Bank is uniquely positioned to help Indian companies purchase the goods and services that they need from U.S. exporters. But the difference between what we have done and what we want to do remains great.

Trade often seems like an abstraction, whose tangible benefits seem hard to see. Yet, as the stories I've mentioned demonstrate, trade means more business for companies and better lives for people on both sides of a transaction.

It is clearly in India's interest and America's interest to work to increase trade. As I've mentioned, the Bush Administration has made it a priority to expand and deepen the commercial ties between our two great democracies.

Ex-Im Bank can help companies realize the benefits of trade. I know that I -- and our team of professionals at Ex-Im Bank -- will be responsive to your needs. We look forward to helping you. If you have any questions, either I or my colleagues from Ex-Im Bank would be happy to answer them.