India's policy decisions dampen investment climate: US
Chennai: Several recent policy decisions by India have caused "significant concern" and "dampened sentiment" about its investment climate, US Ambassador to India Nancy J Powell said Monday.
"The adoption of manufacturing policies discriminatory to foreign companies and the inclusion of retroactive tax provisions in the Finance Bill are two examples," Powell said, addressing members of the Indo American Chamber of Commerce (IACC) and American Chamber of Commerce (AMCHAM).
Voicing concern over challenges to trade and investment, she also called for a level playing field for US companies doing business with India.
Powell said she was committed to ensuring that US companies can compete on a level playing field in India and operate in the same open and fair environment that Indian firms enjoy in the US.
Powell said she had met US and Indian businessmen in Washington before her arrival, and they voiced their concerns over high tariff and non-tariff barriers, restrictions on foreign investment, lack of transparency and defence offset requirements.
Recently, US Treasury Secretary Timothy Geithner met with Finance Minister Pranab Mukherjee encouraging him to reassure foreign investors that India would continue to welcome foreign capital by "advancing important economic reforms," she said.
On the economic opportunities between the two, Powell said both India and the US were "poised to sign an additional $8 billion in Direct Commercial and Foreign Military Sales," through which India would assume a larger leadership role in the region and effectively respond to security concerns and humanitarian relief operations.
Noting US-India partnership in the defence sector has experienced one of the highest growth rates in the region, she said, "With the C-17, C-130J sale, we have more than doubled our total Foreign Military Sales and posted sales making India the third largest FMS market for 2011."
The US envoy said Air India's purchase of the Boeing 787 Dreamliner aircraft would be a significant boost for US jobs and exports and the Indian aviation sector.
"The fuel-efficient Dreamliners are a key component of Air India?s restructuring plan as India positions itself to become a global aviation hub," Powell said.
Observing that the total bilateral trade in goods and services was expected to reach USD 100 billion this year, she said both countries were engaged in technical discussions on a Bilateral Investment Treaty (BIT) that would help foster investment opportunities.
She said Washington’s recent announcement of a new model BIT has contributed to the active advancement of BIT negotiations between the two countries and "we are expecting a new round to kick off very soon".
"A BIT would enhance transparency and predictability to investors, and support economic growth and job creation in both our countries," she said.
India has become one of the fastest growing sources of investment in the US, creating well-paid jobs for tens of thousands of Americans, she said, adding, nearly 50 percent of the high-tech Start-ups in Silicon Valley and Washington are owned by Indians or Indian-Americans.
Citing a McKinsey report, which said India needed USD 143 billion investments in health care, USD 392 billion in transportation infrastructure and USD 1.25 trillion in energy production by 2030, Powell said that by reducing barriers to foreign investment, US companies can help India accomplish these ambitious goals.
Bolstering bilateral trade and investment, expanding defence cooperation, enhancing ties in international fora, counter-terrorism and global threats were her objectives, she said.