Allow foreign investment in retail: US envoy

Stating that India was one of the most closed economies, US ambassador David C Mulford called for allowing foreign investment in the retail sector and a reduction in agricultural tariffs. He, however, adopted a defensive posture on reducing domestic support extended to US farmers.

He said while there had been an improvement in the bilateral relations between the countries, which was visible through developments like joint military exercises and scientific research, trade and investment were areas that had underperformed.

On foreign investment ban in the retail sector, he said, "Removal of restrictions will accelerate the transformation of this up-and-coming sector, bringing with it supply-chain efficiencies and a stronger domestic food-processing sector," Mulford said at Aahar 2004, an agricultural exhibition.

Attacking India for its high agricultural tariffs, the US ambassador said: "The US is one of the world's most open economies, and India one of the most closed. In agriculture, India enjoyed a $857 million trade surplus with the United States in 2003. Meanwhile, it has taken six years for US agricultural exports to India to almost double to a modest $309 million in 2003."

Mulford said, "Given India's population, a growing middle-class, and the robust economic growth, this figure is too small. If India increased access to its market for agricultural goods, it would provide all segments of society with increased consumer choice and lower prices."

However, the US showed little signs of cutting subsidies, which developing countries like India said hampered their farm exports.

Mulford maintained that the US had committed to reduce domestic support but it could not proceed till others like the European Union, "who had much higher levels of agricultural subsidies", did their part. The US ambassador also linked reduction in domestic support to tariff cuts by countries like India.