India needs to do more to attract large FDI: US leaders

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There is more concern among US businesses now about investing in India than was a few years ago though New Delhi was pursuing reforms, senior American leaders have said.

The US trade representatives (USTR), Mike Froman and David Cote, chairman and CEO of Honeywell, said India needs to address the concerns of the American business on a host of policy issues so as to attract foreign direct investment in key areas like infrastructure sectors.

They said bilateral trade with India was way below that with China and called for addressing key issues.

At the same time, Froman and Cote — who are the US co-chairs of the India-US CEOs Forum — said the key Indian functionaries are committed to reforms.

They said those including finance minister P. Chidambaram, commerce and industry minister Anand Sharma and the planning commission deputy chairperson, Montek Singh Ahluwalia, are committed to the reforms, “though it is not happening much as they would like to”.

“In our relationship with a number of different countries, the business community often has been the strongest component of close relationships. When the business community feels that things are not going well and begin to raise questions about the relationship, it has an impact on the bilateral relationship on the politics, which you seen by the reaction from the members of the Congress as well. So that is so important,” Froman said.

In an exclusive joint interview to PTI at the Foggy Bottom headquarters of the state department after the meeting of the India-US CEOs Forum, the two representing the voice of Obama administration and corporate America, said their issues with India are recoverable.

“It is recoverable. That is why it is so important that we are requesting the government of India to address these issues so that we can maintain the strong foundations for a good US India relationship,” Froman said.

“There was a very frank discussion, where in body held back any issues,” Froman said.

“Over the last two years we have felt a cooling when it comes to US interests in investing in India. They are cooling, because we have seen a number of actions taken, each explainable in itself but cumulatively causing US investors to say aaaann, you know, I may be wanting to think up a little bit more,” Cote said.

Responding to a question, Cote gave a sense that US companies are unlikely to be forthcoming in investing in India much unless their concerns are addressed.

“There is more concern now about investing in India than was a few years ago. This is all very recoverable.”

Froman said the US companies are the friends of India.

“These are the friends of India. Which allows them to say to the government of India, here are the things that we are concerned about if you really want to attract massive foreign direct investment in infrastructure and other areas, these are the short of things that the industries are concerned about,” Froman said.

“I want India to do well,” Cote added.

“When you are afraid about where you are putting your money, you look for other places where you are going to be less fearful about it. Over the last few years that fear has been going up, not down. This is all recoverable. It is not like people giving up. But it is important to recognise the dynamics,” Cote said.

Froman, in particular, commended Chidambaram, Sharma and Ahluwalia, noting that they were very much engaged, heard the concerns, and responded very forthrightly.

“We know that they are working with the Prime Minister (Manmohan Singh) to address many of the issues and we want them to succeed,” Froman said.

“I think, I had the privilege of having meeting with the two ministers separately over the past 24 hours. I think, both would like to make progress on some of these issues and some of those issues may be dealt with executive actions rather than through Parliamentary action. We are looking forward to seeing how they address them going forward,” Froman said.

“I think, both would also say there are a number of things they can point to, reforms have been occurring,” Cote added.

“For example the recent decision by the Government of India on PMA to hold in abeyance, review it and potentially modify that is a positive signal,” Froman added.

During the meeting, the Indian side had raised the issue of immigration reform and the visa issue and told the Americans they intend to take the matter directly with the Congressmen with American businesses.

Observing that India and the US have made significant progress in bilateral relationship in the sphere of security and economic sphere, Froman asserted that the two countries have a long way to go. “There is a long way to go. And as many people said over the last 24 hours, while the trading relationship for example has improved significantly in the last 10 years, it is very small compared to the size of our economy. The two-way trade is 100 billion dollars. Our two way trade with China is more than four times of that. And so there is a lot more to be done together, if we can address some of the issues and concerns. That would be the focus of the next four years,” Froman said.