US pitches for level playing field for its firms in foreign investment regulations of India on US President Barack Obama’s India visit

Ahead of US president Obama’s visit to India, the US voiced its concerns over Indian FDI regulations that it termed as opaque. In a summit organized before Obama arrives in the country, the Americans voiced their concerns for a level playing field and an atmosphere of genuine competition for its firms doing business in India. According to the US, India’s existing FDI rules are not prohibitive and her tariffs complex.

While addressing a meeting for Indo-US business leaders, US commerce secretary Gary Locke said India’s (FDI) rules will halt rather than stimulate foreign investment. All that the US seeks is a level-playing field for its companies and a genuine competition. The Summit was organized ahead of US president Barack Obama’s address to the CEOs of the two nations.

According to Locke, it is very important that India stays away from policies that could slowdown this level-playing field. He further termed the country’s import tariffs as complex and various non-tariff barriers have grown, serving as effective trade barriers.

India receives about 8 per cent of total foreign investment from the US. FDI in 2009-10 was $25.8 billion, while Indo-US trade in 2009-10 stood at $36.5 billion. However, speaking at the same gathering, India commerce and industry Minister Anand Sharma noted the need for intense engagement between the two countries to meet the challenges facing the global economy.

Wal-Mart, the world’s biggest retail chain brand has been unsuccessfully trying to break into the India multi-brand retail market. At present, FDI in multi-brand retail is prohibited, but India allows 51 per cent foreign equity participation in single brand retail and up to 100 per cent FDI is allowed in wholesale business. This just but one of the many regulations the US secretary termed opaque. However, sectors such as the retail in India are multi-billion business sectors and are politically sensitive, say analysts.

Barack Obama’s signed 20 deals worth $10 billion, more important, they are estimated to create 50,000 jobs in the US. The US has already activated a crack team in its embassy in New Delhi that is targeting 68 upcoming cities in India with a projected population of more than one million by 2030. With incomes in these cities likely to exceed $4 trillion, the team is to scour for deals worth at least $1 trillion, spread over sectors like education, health, energy and infrastructure, in the next 20 years.

7 Nov 2010.