Financial Daily from THE HINDU group of publications
Wednesday, Feb 22, 2006
Financial Daily from THE HINDU group of publications Wednesday, Feb 22, 2006 |
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Industry & Economy
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Foreign Direct Investment Sectoral issues need to be addressed for FDI inflow, says American Chamber Our Bureau
New Delhi , Feb. 21 THE American Chamber of Commerce in India (AMCHAM) has submitted a compendium of position papers on key industries to the Ministries concerned stating that several sectoral issues need to be addressed in order to attract more FDI from the US. "In the last one year, Indo-US relationship especially after the visit of the Prime Minister, Dr Manmohan Singh, has reached a level which was implausible a few years ago," said Mr Amrit Kiran Singh, Chairman of AMCHAM. "Revitalisation of Indo-US Economic Dialogue and the forthcoming visit of the US President, Mr George Bush, has generated lots of enthusiasm in the business community of both the countries. To harness the positive economic atmosphere created by the personal interest of these two leaders and to translate it into reality, resolving of sectoral issues is imperative." He added: "The chamber believes that there is a significant opportunity for US companies to expand their operations in sectors such as entertainment and media, food processing, IT, and retail, provided the sectoral issues are addressed." The position papers have been prepared with the help of PricewaterhouseCoopers and sectoral committees of AMCHAM concerned. Due to the barriers to FDI, India is able to attract only $5 billion from the US, whereas China gets about $60 billion. Terming poor infrastructure, belligerent tax administration, fragmented markets, and pragmatic labour laws as hurdles to FDI, Mr Singh said: "If these issues are resolved, companies present in India and those in waiting would surely expand operations." Investments by American companies in India account for 18 per cent of the total FDI received by the country. On the insurance sector, Mr Singh said that it has great potential. The penetration of life and general insurance, however, continues to be low in comparison with international benchmarks, according to Mr Vivek Mehra of AMCHAM. "The immediate need of the industry is a relaxation of the cap on FDI from the current rate of 26 per cent to 49 per cent or 74 per cent," he added.
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