One of the most consequential relationships that India has is with the US. To talk more about the US-India relationship, where it stands right now, and some of the contentious issues we are dealing with, and the roadmap for how soon it could actually come about, I'm in conversation with Mr. John Chambers and Dr. Mukesh Aghi. Both of them are from the USISPF. Extremely accomplished. Thank you so much, both of you. Mr. Chambers, you're a former chairman and CEO of Cisco. You are chairman of USISPF. Let me start by asking you, sir, the top two or three things in terms of the US-India relationship from a priority point of view that you think are likely to be your key focus areas in the next 12 to 18 months.
Well, first, if you call me John, I won't feel old or formal. And I do form friendships for life, and that's what we're also doing, Candy, between the India and the US arrangement. When you think about it, the number one takeaway is 20 years ago, I bet on India as the most important strategic relationship to Cisco in the world. We made it our second world headquarters. 10 years ago, when Prime Minister Modi was elected, we formed the US-India Strategic Partnership Forum and we said we're going to have a strategic partnership between two nations that nobody's ever envisioned that would change the lives of people in each nation, businesses, and literally be the model for the rest of the world. A dream most people thought was too far, and yet it was not. We outlined each step along the way that not only would India be the fastest-growing economy in the world—and remember, 20 years ago it was number 12, today it's number four—but we said when Prime Minister Modi came to the US and I had the honor to introduce him at the Kennedy Center in the state visit, that India would become the number one economy in the world. That was when people suddenly realized the change that was occurring. But to do that right in today's world, you've got to have partnerships. And there's no partnership more powerful than the two largest democracies, the two best that could lead in AI, on technology and direction. India has 1.2 million engineers a year, and the US has major economic strength and strong technology companies, and India's beginning to get its startup engine going. Third area for me personally, it's startups. You talk about the job creator in India for the future, it will be the startups themselves. When you do something others have not done, it's going to be hard, and there are going to be bumps along the way. And if the first time you hit a serious bump it comes apart, it means you didn't really have the trust there. I think what we built is not only bridges but a network, using my prior Cisco terms, between the top government leaders, business leaders, and direction. And when you talk to our memberships, they're 100% committed to investing more in India. And businesses have to make these decisions that we kind of think of what is the news of this quarter or the next month. Yes, the businesses, when we invest, we have to bet five and 20 years out. So the key takeaways: India is going to be the number one economy in the world. You're on track for making that happen. You get there a lot faster with the US and the partnering. We can be the job creator together with startups and leading innovation, and it can be very, very inclusive. That would be my key takeaways.
So you mentioned several very important aspects, but if I bring you in, Dr. Aghi, this has been a year which many believe has been a year of three steps forward and two steps backward. If one were to look at the US-India relationship simply because of the very volatile dynamic that we are all living in, as things stand right now, there is the prospect of a trade deal, but at the same time there are several other parallel things that are happening, whether you talk about the rhetoric, whether you talk about the energy security issues for India, or even H-1B. So across the board, as I said, volatility has been pretty much the big dynamic this year. In your assessment, how soon are we going to get out of this uneasy situation that is there for the immediate and move on to some of the longer-term direction that Mr. Chambers highlighted?
Well, there are a couple of factors. There is a geopolitical shift taking place where you have China rising, getting much more assertive. You have Europe which seems to be struggling in many aspects, from an aging population to an economy not growing as robust. At the same time, what we have is a US president who seems to be basically changing the order which was set up almost 70 years ago by the US. So what we have is multiple shifts taking place, and they're not directed at India; other countries are going through the same process itself. Yes, on the tariff part, India is impacted because 50% tariff is impacting. But you have to understand the relationship between the United States and India. It's not just about tariff. It's more than that. It is about defense.
We understand this. You sit in DC, sir. You speak to both sides. Do they understand this?
No, absolutely. You have to, you know, you go down to the US Congress, they basically are empathizing with India. You talk to the business community, they are not backing off investing in India. In fact, if you look at year-to-year investment, the FDI has gone up by 78% itself. You look at the GCC centers, 60% are American and they are increasing from that perspective. So, I think let's not basically look at the relation purely from a tariff perspective. The relationship is much, much broader, and 75%, 80% of the relationship is still going in a positive direction.
And it's probably one of the few, if I can jump in, areas that both the Democrats and Republicans agree on, which they don't agree on a lot of things right now, but it's the importance of India partnership.
See, I'll tell you why I'm asking this is because we in India feel, and I'll give you one number, which is that just the last month shipments to the US have fallen 12.5%. That's a very large number. Engineering goods, which are about 25% of Indian exports to the US, are down 9.8%. These are significant numbers. India is now putting out some cushion to its exporters, whether it is in terms of SOPs, whether it's in terms of policies. So there is a hard economic impact of what is happening right now as far as the Trump administration is concerned, and the sense we get is that's beginning to dominate other aspects of the relationship. You mentioned about technology, you mentioned about startups, you mentioned about long-term collaboration. All of that seems to suddenly be outweighed by this immediate discussion around tariffs. You want to take that, sir, and then we talk just...
Yes, the tariffs, exports are down by 12%. But if you look at the GDP of India and its exports itself, if it's down by 12%, the impact on the GDP growth is very minimal. Still, India is growing by 7.5%. So yes, we like to see those exports go up. Yes, those exports are from low-end, low-price items such as garments and shrimps and all the stuff which has an impact on the job creation. But overall, regardless of the deal happens or not, India's economy is moving in a positive way, is growing as one of the fastest-growing economies. The message I want to send is that yes, the relationship is there, but it's not just about tariff. It's a much broader and deeper relationship.
I'm going to talk on all of that, but one final word on the trade deal. As someone who speaks on both sides to policymakers, how close do you think we really are in terms of sealing that deal and moving on to several of the other aspects of the relationship?
Well, the president said last week, 'I'll have a very good deal for India. It'll be done very soon.' And basically from the India side, they have concluded everything. Now the ball is in the US side, and hopefully in the next few weeks the president will announce that.
And you said it very well. You said how do we get our focus off transactions? It's an important transaction, and get it back to transformational examples. I believe firmly that the US-India relationship will add 2% growth per year to India's GDP growth, and I think it'll add one to the US, which is already a pretty big number. India, as I was one of the first to say, will be the largest economy in the world. I think the two of us together can make that happen. Could we have done it smoother? Absolutely. But I think you become stronger when you learn to deal with problems and work it through, as opposed to you have a problem and all of a sudden you begin to revisit 20 years of tremendous positives.
In terms of technology, an area that, sir, you understand so well, what do you think could be the kind of opportunities that an India-US technology collaboration—it's already there—but the next frontier, so to say, where do you think that'll be?
The next frontier is clearly AI. Remember, just two years ago people couldn't even spell it. Prime Minister Modi said America-India in terms of leadership. I've been in AI for eight years. I have 10 unicorns, two decacorns, all AI in terms of the direction. We could move together with tremendous speed because every company in India and in the US, regardless of whether in healthcare, manufacturing, aerospace, etc., will be AI. So it's a chance to intersect an inflection point in the market with a new technology. That's where leadership occurs. That's where economic job creation occurs. And if we focus on how do we do that together, which I think we can do much better together than either one of us by ourselves, that's what will happen. One of the chief ministers today, not to mention the one, but he had 14 different deals working with American business companies. Most all of them were around AI, but they were everything from the Caterpillars of the world to the Googles of the world to the Lockheed Martins, etc. So by doing that together, I think we can accelerate this economy and be very candid, the US economy together in a unique way, and I think it can be inclusive across all the states in India, not just four or five centers.
Can I just add to that? When you look at GCCs, over 1,000 are American, and almost 300,000 IP and patents have come out of those GCCs. Now that's innovation. It's not India-US collaboration, but it's people-to-people, business-to-business. You look at on the defense side, there is joint co-production happening between Lockheed and Tata, Boeing and Tata itself. And then on the space side, I mean, both ISRO and NASA and the private sectors are collaborating. So I think from a technology perspective, when I look at US, 60% of the AI startups have some kind of Indian signature to it.
Absolutely. But also in the same breath, we have some conversations around H-1Bs and around visas and around student visas, all of which come back to say that how a very small part gets focused so much that such large upsides to the relationship get completely outweighed. Your thoughts on H-1B? It impacts India in a very, very significant way.
Well, you know, I agree with the thoughts, but you have to look at the US economy employs roughly 171 million people, and the combined H-1B today is only 700,000. So that's not a big number for that large pool. That's number one. Two is, yes, 70% of the H-1B goes to India itself. The impact is not much there by putting a $100,000 fee because when you take the $100,000 fee and spread it over six years, it's only $15,000 a year. So I don't think that's going to slow down. When you talk to the companies, they're not slowing down hiring on H-1B. Yes, the low-end jobs probably will move offshore, but the high-end, they'll just pay the fee and continue with that. Even if you look at the startups, you probably already know this, but out of our large technology companies in the US, half of them are led by Indian diaspora.
