Trade and investment missing links in ties: U.S. envoy

Tuesday, 29 October 2002, 08:00 Hrs
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NEW DELHI: Calling trade and investment the "missing link" in the dramatically transformed U.S.-India relations, American ambassador Robert Blackwill Tuesday urged New Delhi to get on board the "high-speed train" that is the global economy.

"The train does not wait. It is never cancelled. No one knows how to slow it down or change its direction. It is the future," said the blunt-speaking envoy, sounding frustrated with India's slow pace of economic reforms.

In an address to the Federation of Indian Chambers of Commerce and Industry (FICCI) here, he even taunted the audience comprising captains of industry by making a comparison between the performances of the Indian and Chinese economies.

The close U.S.-India collaboration "would be made more wide reaching and successful by a fundamentally reformed and globalized Indian economy," he said.

"On the geopolitical side, an India that takes full advantage of its extraordinary human capital to boost its economy would be a more effective strategic partner of the U.S. over the next decades, including in promoting peace, stability and freedom in Asia."

Blackwill noted that over the last 20 years, China's gross domestic product (GDP) grew at about 10 percent a year compared with India's six percent, Chinese per capita income touched $900, about double the figure in India, and China's electricity production grew from 670 billion kilowatt hours in 1991 to 1.4 trillion kilowatt hours in 2001 against India's growth from 290 billion to 450 billion kilowatt hours.

He also drew attention to China's success in attracting $47 billion in foreign direct investments (FDI), or 21 percent of FDI in developing countries, last year when India managed a mere $4 billion, less than two percent of the global share.

"These comparative trends obviously affect the investment decisions of private companies," Blackwill said.

He quoted General Electric's chairman and CEO Jeffrey Immelt as saying that while the healthcare markets in India and China were nearly the same size in 1995, the Chinese market is now six times bigger in terms of company revenue, fuelled by the fast growing domestic market. As a result, the company's investments in Asia are now going to China, not India.

Blackwill said he was troubled by the Indian argument that the slow growth rate was the price the country had to pay for its democracy. "This seems wrong to me. India is capable of high growth rates without compromising its democratic governance.

"The values of democracy and free markets are mutually reinforcing. Both are based on freedom of choice, the rule of law and transparency. What is required is consistent implementation," he asserted.

The envoy said Americans hesitated to invest in India because of the uncertainty of this country's economic reforms.

"The disinvestment debate in the last two months is only the latest example," Blackwill said, referring to the Indian government's decision to put on hold the privatization of public sector units for three months following serious differences among senior ministers.

"Potential U.S. investors stress to me that Indian taxes and tariffs are still too high and there remains too much government interference over business decisions."

He called for opening up of the retail sector to foreign companies and development of infrastructure and the power sector as well as a modern legal framework to protect intellectual property rights that would encourage U.S. pharmaceutical and biotech companies to expand their presence here.

Blackwill noted President George W. Bush's reference to India as one of the "great democratic powers of the 21st century" and the intensive engagement between the two countries across a wide spectrum of diplomatic collaboration.

These covered counter-terrorism efforts, defense and military-to-military cooperation, intelligence exchange, law enforcement, development assistance, joint scientific and health projects, including HIV/AIDS and the global environment.

"This is all occurring because there are no fundamental differences in vital national interests between the U.S. and India, including our identical objective of helping to bring about a peaceful and democratic South Asia -- free from terrorism, either domestic or of the murderous cross-border variety.

"But, U.S.-India economic relations lag far behind major advances in all these other areas," he said.

Source: IANS
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