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India should pick up pace of economic reforms: US

business Updated: Jun 25, 2011 10:52 IST

The United States is pushing India to provide greater market access, open up the multi brand retail sector and step up the pace of economic reforms to realise the full potential of one of the fastest growing economies in the world.

"It would be good to reinvigorate the reforms process for India's continued growth prospects," a senior US official said, ahead of what is billed as their "highest level' economic engagement in Washington next week with finance minister Pranab Mukherjee and US treasury secretary Timothy Geithner leading the two sides.

"Greater market access and retail multi-branding, those are all areas which matter," treasury under secretary Lael Brainard told the Indian media ahead of next week's meeting of the US-India Economic and Financial Partnership.

"There are a host of benefits for opening up the retail sector," ranging from more variety to cheaper cost to faster delivery of food products, she said, suggesting that US companies had pioneered a lot of innovations and would like to participate.

Listing insurance and equity caps as some of the other areas US would like India to open up, Brainard said, "Some of these barriers are seen to less attract foreign investment overall coming into India than some of the other dynamic Asian economies without the benefits of greater quality or greater provision of services."

Asked about Indian corporate concerns on issues like new visa restrictions and tantalisation of social security benefits, she said India was the biggest beneficiary of H1B visas for professionals and that "Indian access has not changed in any way" with the new restrictions.

"On equalisation of social security, it's not clear how far India will want to participate as our systems are so very different," Brainard said. "Nevertheless, in principle US is ready to engage in discussions to figure out ways" to meet Indian concerns.

The US, she said, was also very eager to deepen cooperation with India on money laundering and counter-terrorism financing.

Asked about some of the recent scams and the anti-corruption movement in India, Brainard said while she was not in a position to judge issues, "one of the key factors in explaining the health of investment environment is how much transparency is there in operations and how effective are the safeguards against corruption."

"Broadly, it's very beneficial for both foreign direct investment and domestic investment, an environment which is effective in combating corruption, absolutely."

The key focus of the meeting will be infrastructure development, capital markets reforms, cooperation on the Group of 20 efforts to reduce trade imbalances, and efforts to combat money laundering, she said.