The American body, representing US companies doing

business in India, reiterated its demand to increase the foreign direct investment in the defense sector to 74 percent, to 49 percent in insurance sector from the current 26 percent, and called for reforms in the pension and banking sectors. "We respectfully request that the priority sector lending targets for a foreign bank, whether under a branch or wholly-owned subsidiary structure, be directly correlated to RBI�s policy on both national treatment and applicable branch licensing policy," said the 23-page memorandum, a copy of which was obtained by from authoritative sources in the Union Finance Ministry. "We recommend that given that the core strength of foreign banks is trade-based financial activities, infrastructure lending, and the ability to raise resources for capital intensive projects, the scope of priority sector lending should be widened beyond its current form in addition to export finance, to include infrastructure and indirect agricultural lending without any sub-limits," USIBC said. The regulatory framework around India's National Payments System should not differentiate between foreign and domestic providers in the interest of low cost, high quality payment and money transfer services, it noted. Furthermore, global industry has a significant concern that India is moving toward an on-shore data processing requirement, it said. USIBC said there remain various restrictions on cross border trading, which, in combination with existing currency convertibility requirements, limit the potential for collaboration between foreign companies in India and which limit both Indian and foreign investors in their ability to arbitrage and/or hedge risks. As such it supported sound, measured moves by India to liberalise the existing Foreign Institutional Investor regime and to gradually lift the existing Liberalised Remittance Scheme (LRS) caps commensurate with India's capital requirements, global standards, and consumer needs. USIBC also urged the Finance Minister to allow for the establishment of over-the-counter(OTC)-traded depository receipt programs for those Indian companies that have previously raised capital and established programs under the US Securities and Exchange Commission (SEC)'s "Reg S."