New Delhi, Feb 12: Stating that only “invitation” is not sufficient to convince American companies to invest here, the US has said India must remove entry barriers and improve ease of doing business to compete better with other countries.
“The (FDI) numbers are getting better but they are not what they should be,” US Ambassador to India Richard Verma said here.
“The invitation is not sufficient,” he said in reply to a question on why invitations extended to the US investors by Prime Minister Narendra Modi and Finance Minister Arun Jaitley have not yielded desired results in terms of FDI inflows.
Listing out his “reasons” on why the FDI numbers were not where they should be, Verma said some of the issues “are being addressed, (but) some are not”.
“It is the overall ease of doing business umbrella which has a list of factors — Is there tax certainty? We have made a lot of progress on that front.
“Is there legal certainty in contract sanctity? This is where a bilateral investment treaty can really help,” he said during an interactive session organsied by FIEO (Federation of Indian Export Organisations) on Thursday.
“If they (US investors) are looking at other parts of Asia, they might look at Singapore, Vietnam, Thailand, and normally in India also they are looking at different states so it is an exceptionally competitive market and the invitation is not sufficient,” he added.
Stating that India has started well, he said the country needs to do more to better compete with other markets.
“It is a great start but you have got to be able to compete just as we (US) have to be able to compete with the other countries in Europe and Asia…. As barriers to market entry come down, you will see a number of American companies and investors (investing in India),” Verma said.
Pointing out that India’s trade surplus with the US is USD 28 billion, Verma said the two countries need to do much more to grow their bilateral trade and investments and realize the true untapped potential of their economic relationship.
“In 2014, the US exports to India were 1.6 per cent of our total exports while imports from India to the US were only 2.3 per cent of our total imports. So in the India-US trading relationship the actual percentage is still quite small given the size of our economies,” he said.
Verma said a bilateral investment treaty with India will be a “shot in the arm” of both countries and help integrate their economies. He expressed confidence of achieving the bilateral trade target of USD 500 billion by 2025 if the trade barriers are removed.
