US urges Indian government to be more investment-friendly

The United States on Wednesday urged the Indian government that emerges from ongoing elections to follow economic policies that encourage investment, saying Washington would like to see bilateral trade grow to $500 billion a year.

Nisha Biswal, US assistant secretary of state for South and Central Asia, said future economic growth in South Asia hinged on India as the region's growth engine.
However, Biswal said that while Indian leaders had targeted $1 trillion in infrastructure investment over five years to close gaps preventing growth in manufacturing, policies still inhibited foreign investment. She said India ranked a poor 134 out of 189 countries as a place to invest and start a business.

"India, the world’s largest democracy, must decide its own path to the future," Biswal said in a speech at Harvard University's Kennedy School of Government.

"Will it make reforms necessary to attract investment? Will it capitalize on the opportunities that lie in front of it?

"Those are the questions that India’s voters are asking as they cast their ballots and those are the questions that we want to see answered," she said.
Growth in Asia's third-largest economy, has almost halved to below 5 percent in the past two years on weak investment and consumer demand, the worst slowdown since the 1980s.

In its election manifesto, the BJP said it would welcome foreign direct investment in all sectors that create local jobs, - except for supermarkets, a setback to global chains such as Wal-Mart Stores Inc and Carrefour

BJP policy caution

BJP insiders remain cautious about laying out specific plans because the party may need to adjust its policies after the election to win over allies and form a coalition government if it falls short of the parliamentary majority required to rule.

Biswal said India has potential to exceed all expectations economically, but needs to adopt investment and tax policies designed to lure, not deter, capital flows and a system of timely regulatory approvals and contract enforcement.

It also needed to protect intellectual property rights, she said. "The more integrated India is into global markets and into the economic architecture of Asia, the more India’s economy will grow and benefit the entire global economic system," she said.
Biswal said the United States wanted to see bilateral trade grow to $500 billion a year. It is about $100 billion currently.

Senior BJP leader Arun Jaitley said in an interview this weekend that the party should give direction in five broad areas: infrastructure, building suburban and new urban townships, massive skill development programmes, tourism, and lowering costs for business.