New Delhi, Jul 22 (Agency) Seeking an expanded investment and trade relation with India, the United States has urged the Narendra Modi government to reduce barriers to investment and minimise bureaucratic hurdles for businesses. The State Department released a report on investment climate in India on Wednesday and urged the government to foster an “attractive and reliable investment climate.” The “2021 Investment Climate Statements: India” report noted the structural reforms and other policy measures initiated by the government, and yet, it said, “India remains a challenging place to do business.”
“New protectionist measures, including increased tariffs, procurement rules that limit competitive choices, sanitary and phytosanitary measures not based on science, and Indian-specific standards not aligned with international standards, effectively closed off producers from global supply chains and restricted the expansion in bilateral trade, ” it said. “The U.S. government continued to urge the Government of India to foster an attractive and reliable investment climate by reducing barriers to investment and minimizing bureaucratic hurdles for businesses, ” it added. The State Department statement, notably, comes just weeks after Finance Minister Nirmala Sitharaman said India is committed to a long-term relationship with US investors and proposed to meet twice a year. The statement also comes ahead of a visit of Secretary of State Antony Blinken to the country that is likely in the next few weeks.
At a investors roundtable organised by the US-India Strategic Partnership Forum last month, Sitharaman spoke about going ahead with an overall vision to build a self-reliant modern India driven by Intent, Inclusion, Investment, Infrastructure and Innovation. The State Department said Government of India continued to actively court foreign investment. In the wake of COVID-19, India enacted ambitious structural economic reforms, including new labour codes and landmark agricultural sector reforms, that should help attract private and foreign direct investment. In February 2021, the Finance Minister announced plans to raise $2.4 billion though an ambitious privatization programme that would dramatically reduce the government’s role in the economy.
In March 2021, parliament further liberalized India’s insurance sector, increasing the foreign direct investment (FDI) limits to 74 per cent from 49 per cent, though still requiring a majority of the Board of Directors and management personnel to be Indian nationals. In response to the economic challenges created by COVID-19 and the resulting national lockdown, the Government of India enacted extensive social welfare and economic stimulus programs and increased spending on infrastructure and public health. The government also adopted production linked incentives to promote manufacturing in pharmaceuticals, automobiles, textiles, electronics, and other sectors. These measures helped India recover from an approximately eight percent fall in GDP between April 2020 and March 2021, with positive growth returning by January 2021. The US is the second top investor in India after Singapore. There was 44 per cent increase recorded in FDI equity inflow from the US during the FY 2020-21 compared to FY 2019-20, according to Invest India.