The Hindu Business Line : US merchandise exports up 21 pc — `Growing trade gap needs rectification'

MR George N. Sibley, US Consul General in Kolkata, has said that in the first nine months of 2003-04, US merchandise exports to India were up 20.8 per cent over the same period a year earlier.

After being stuck in the $3.4 billion-$3.7 billion range during 1997-2002, the annualised US merchandise exports to India in 2003 was likely to approach $4.4 billion. The same annualised projection for Indian exports to US is said to be around $13.3 billion.

Participating in an interactive session organised by the Bengal National Chamber of Commerce & Industry (BNCC) here on Monday, he said the two-way trade between India and US grew by about 13 per cent in 2003, when US exports grew by about 19 per cent, while Indian exports grew by about 11 per cent, though from a much higher base.

Pointing out that the US was India's largest trading partner, Mr Sibley said, "Our bilateral trade gap with India has continued to grow, and this is something we need to rectify." The total bilateral merchandise trade in 2002 was worth $15.5 billion, and was 3.2 to one in India's favour.

He said on the investment side, total US direct investment in India reached a record net historical position of $3.7 billion in 2002, although annual flows have decreased to barely $250 million.

"For this reason, US direct investment in India trails our investment in Malaysia ($8.5 billion), Indonesia ($7.5 billion) and Thailand ($6.8 billion) - to say nothing of China." Sectors in India with direct US investment include utilities, banking and financial services, industrial machinery, chemicals, wholesale trade, and computers and electronic products.

The US Consul said the need of the hour was for a second generation of reforms to sustain growth. He cited a handful of reforms that could help India boost itself into a higher growth plane.

These were: a) "Sanity of contract" needs to be honoured; b) Although tariffs have fallen again in the most recent Budget announcement, they are still too high and the indirect tax system too complex; c) Limits on FDI should be eased; d) India needs to strengthen its regime for Intellectual Property Rights (lack of product patent protection for pharmaceuticals, food and agro-chemicals and data exclusivity for research data has had a strong negative impact on US interests); and e) Lastly, a rejuvenated privatisation programme would send a positive signal to the international community.

Delineating the big picture of Indo-US relations within the "gallery-wide" perspective of the whole relationship, he said many of the obstacles to economic ties, many of them products of the Cold War, have been largely removed.

"Now we recognise more clearly that we share a common vision founded on the principles of democracy, individual freedom, the rule of law and the search for peace."

Among the principal US exports to India are items like machinery, parts for oil drilling and construction equipment, gas turbines and parts, and other industrial machinery, electrical machinery, including computers and components, office machines and parts, recorded media, telephonic and telegraphic equipment and parts, and integrated circuits and medical equipment.

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