US wants India to open financial sector more

June 26th, 2008 - 11:45 am ICT by IANS  

By Arun Kumar
Washington, June 26 (IANS) Describing India-US relations as “very important to the growth and success of the global economy,” a senior US official has asked New Delhi to go in for further financial sector liberalisation. Opening up further will make India better and bring benefit to Indian business and people, said David McCormick, Under Secretary of Treasury in charge of International Affairs, stressing the need to reduce barriers to investment.

He was speaking at a luncheon meeting of the United States India Business Council (USIBC) here Wednesday for a CEO delegation from India under the aegis of the Confederation of Indian Industry (CII) led by K V Kamath, CEO & Managing Director of ICICI Bank.

McCormick said that one response to the tough global economic situation is the pressure on turning inward or embracing globalisation and that the US has opted for the latter course. “We are in the embrace/stay open camp.”

“India-United States relations is very important to the growth and success of the global economy,” he said. “There are so many dimensions of the relationship that are so important… There is much to be optimistic about.”

McCormick said the US “remains absolutely committed to a bilateral investment treaty with India and we appreciate the response of the Indian government”.

Noting that investment between the US and China is almost 10 times greater than the amount between the US and India, he said: “An Investment Treaty with India is another important rope - among many - connecting two ships heading in the same direction that have common interests and converging economic ties.”

Earlier, former Deputy US Trade Representative Susan Esserman, currently with Steptoe and Johnson, pointed to the rapid growth in not only trade between India and the US but also of the “unbelievable growth” in investment.

“Indian companies have made very significant investments… supporting 30,000 jobs in the US” she said going on to make the case for the start of formal negotiations between the two countries on a Bilateral Investment Treaty.

Noting that India had bilateral investment treaties with 61 countries and the US with 45, Esserman said: “It is the building block upon which freer trade grows.” The BIT “not only ensures recourse, arbitration and basic protections but will also help to level the playing fields,” she said.

“There is no recession when it comes to US-India commercial relationship,” remarked USIBC President Ron Somers. “The Bilateral Investment Treaty is the next hill to climb the top,” he said. “There is a tremendous history. Let us keep it going,” Somers said.

Kamath maintained that the growth story of India continues and there is no indication of any slowdown.

“What is happening in India is the transformational growth that have been seen elsewhere” he said referring to parts of East and South East Asia but pointed out that if in the other countries the manufacturing sector was the prime driving force of the growth, in India it is the services sector.

Tracing the rapid growth in the bilateral economic relations, Kamath said that there is an opportunity today and that businesses of both India and the US must seize upon this for mutual benefit.

“There is a whole range of opportunities in the private- private route,” Kamth said referring to the opportunities in the rural landscape. “The government will be a facilitator on both sides, ” he added.

With between eight and ten million people entering the workforce in India, one of the biggest challenges is that of “skills to manage the jobs and relatedly the need to revamp the educational process,” Kamath said. “To me that seems to be the major challenge.”

The CEO delegation included Gopal Srinivasan, Chair and Managing Director of TVS Capital Funds Limited, Harpal Singh Chair of Ranbaxy Laboratories, Jignesh Shah Chair and CEO of Financial Technologies, Rajan Navani of Jetline Group of Companies and Hari Bhatia, Co Chair and Managing Director of Jubilant Organosys Ltd.

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