India Intelligence Report

Forum Wants Reduced Restriction on FDI


Addressing a joint meeting of Indo-US CEOs, Finance Minister P. Chidambaram called for more investments, technology, process, and management experience from the US. He highlighted that India has been rated as the second best destination for foreign direct investment (FDI) after China but said that it has been rated as the best long-term investment ahead of China. He bemoaned that of the USD 37 billion investments flowing into India, only USD 5 billion is from the US. He said that both figures are insufficient if India is to continue to grow at 8-10% a year. US-India CEOs' Forum co-Chairman William Harrison said that the lack of excitement in investment in India is because of "poor energy supply, roads, airports, ports, the core infrastructure, and bureaucracy." He said, "it is hard to get approvals, permits, and in the legal system, the process is slow and cumbersome and it takes a long time for settlement of disputes." Announcing a plan to set up a USD 5billion infrastructure fund to make Mumbai a financial hub, he called on India to "reduce restrictions on foreign investment, especially banking, insurance, and retail." The forum identified 6 priority areas of co-operation including movement of people between the two countries; national coordination on Intellectual Property Rights (IPR) enforcement in India; reforms in power sector including advanced education and technological cooperation; government-to-government co-operation on the civilian nuclear energy plan; faster clearance on pending legislation to liberalize oil and gas sector; and removal of FDI restriction in banking, insurance, and retail.

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