Welcome American firms: US to India
If India extends warm welcome to US firms, they can be full partners in India's economic development, a senior US official said.
The US-India economic relationship can rival Washington's most productive ties anywhere in the world if New Delhi extends an "unambiguously warm welcome to American firms", a senior US official said on Thursday.
"If India extends an unambiguously warm welcome to American firms, they can be full partners in India's economic development, promoting growth, bringing new technologies, expanding India's exports and creating jobs that lift millions out of poverty," said Alan Larsen, under secretary for economic, business and agricultural affairs.
"That would mean seeing our two-way merchandise trade rise from $17 billion annually to over $100 billion annually within a few years. That would mean seeing US annual investment flows rise from less than half a billion dollars annually to $5 to $10 billion annually within a few years.
"The optimists say this is inevitable and the pessimists say it is impossible. I say it is achievable - but only if people like us in this room can imagine a different future and resolve to make it happen," he said.
He was addressing delegates in Mumbai at the Indo-American Chamber of Commerce Economic Summit, "Raising the Bar: US-India Economic Relations".
He said the growth in two-way trade from $10 billion in 1997 to $17 billion now is good news "at least to a point".
While Indian products and services have done very well in the US market and Indian producers have demonstrated that they can thrive in a very open and competitive marketplace, American exports to India had not fared well, he said.
"India's merchandise exports to the US were over $13 billion in 2003 and are on track to reach $15 billion in 2004. At the same time, American exports to India have languished in a band between $3 billion and $4 billion."
The official said India's growing trade surplus raised concerns in the US government and in the American industry about India's commitment to ensure there is a level playing field.
Similarly, the picture for US investment in India was also lacklustre, Larsen said and noted that annual US investments that reached a peak of $737 million in 1997 have since trended downwards and were only $414 million in 2003.
"There may be many reasons for this situation. Foremost among them, however, is the slow pace of economic reform in India."
Larsen said several corporate leaders had observed that investors needed confidence that India's infrastructure is sufficient to meet its needs, or that the government is committed to making the necessary improvements in infrastructure to attract investment to India instead of other destinations in a highly competitive global marketplace.
He welcomed Prime Minster Manmohan Singh's statement that the government will give priority to streamlining the tax system, restructuring public sector enterprises, promoting competition, tripling direct foreign investment and reducing India's fiscal deficit to three percent within three years.
"If implemented, these should not only have a very positive effect on investment but also should quicken the pace of necessary economic reform," Larsen said.