India seeks more American investment, trade

Thursday, 12 June 2003, 19:30 IST
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India's Commerce Minister Arun Jaitley called for more American investment and trade, saying the huge business potential between the two countries was still to be realized.

WASHINGTON: Jaitley said even though India is the largest trading partner of the U.S. "our volume of trade could be much higher. It is now only $16 billion". Jaitley was addressing the U.S.-India Commercial Dialogue here Wednesday along with U.S. Deputy Secretary of Commerce Samuel W. Bodman. Jaitley is on his maiden visit to the U.S., which began Sunday and ends Friday. He is leading an Indian business delegation comprising key industry members. The focus of the visit is to create an environment for increased Indo-U.S. trade and economic cooperation. The minister expressed the hope that with "our friendly investment policy in place", more business and trade could be promoted between the two nations. He also spoke of how India has adopted an Intellectual Property Rights (IPR) regime that is internationally compatible. Besides, India has large resources of knowledge personnel as well as both skilled and unskilled labour. Jaitley said there were distinct advantages to investing in IT companies, pharmaceuticals and the service sector. Bodman said India had to push forward its economic reforms more vigorously to realise its potential in the global economy. Bodman, who has been to India several times to promote business, said despite considerable progress made by India in implementing economic reforms, much remains to be done to create an attractive and supportive business climate, including more tariff reductions, increases in foreign direct investment limits, implementation of value-added tax, improved intellectual property protection, as well as implementation of the recently passed Electricity Reform Bill. Terming that as a "big agenda", Bodman said the fulfilment would "improve the conditions for commercial partnership with U.S. firms, economic growth in India and, most importantly, for improved living standards for the Indian people". He said the low levels of U.S. exports to India, and the particularly low level of U.S. direct investment in India are a matter of concern. Bodman, however, noted that there were some small but significant improvements in trade. After staying flat for five years, U.S. exports to India increased nine percent in 2002 and crossed the $4 billion mark for the first time. In the first quarter of this year, U.S. exports to India increased almost 26 percent. Secondly, he said U.S. imports from India rose another 21 percent last year - to a record $11.8 billion - and increased 20 percent in the first quarter of 2003 and thirdly, U.S. direct investment has increased to a record net position of $1.7 billion as of 2001 (latest available data). Bodman lamented that the nine percent increase in U.S. exports amounts to just $340 million, which is "just a drop in the bucket", he said, adding: "actually, in a country of over one billion people, $1.7 billion in investment is a drop in the ocean." He said last year, U.S. exports to Malaysia were two-and-a-half times more than U.S. exports to India. "Now, Malaysia has a population of 23 million to India's 1.05 billion people. There is more U.S. direct investment in Chile, Colombia, Malaysia and Peru than in India. So while we have only inched forward, India's immense potential in the global economy is far from being realised. India must be a more significant commercial partner for the U.S. to take advantage of opportunities for the business communities on both sides." The U.S. India Business Council (USIBC) along with the Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (FICCI) hosted the second meeting of the U.S.-India Commercial Dialogue. It focused primarily on three areas -- special economic zones, outsourcing and chemicals/petrochemicals. The dialogue was signed during former president Bill Clinton's March 2000 visit to India. It is the official public-private sector dialogue, designed to facilitate policy exchanges in the hope of increasing trade and investment.
Source: IANS