India and the US are targetting a four-fold jump in bilateral trade to USD 500 billion in the near future, US Ambassador to India Richard R Verma said today, exuding confidence that the goal will be met.
"For the years ahead, we have set a very ambitious goal of USD 500 billion in two-way trade and investment. Given the size of our respective economies, and the trajectories we are on, I'm confident we can get there.
"But we can do much more to accelerate the pace, to continue to liberalise markets and to improve investor confidence," he said at the Atlantic Council US-India Trade Initiative Workshop here.
With its 7.5 per cent growth rate, Prime Minister Narendra Modi envisions a democratic India as a driver of the global economy, he said, adding that pivotal to this vision is the country's economic relationship with the United States.
"Thankfully, our bilateral trade continues to grow, reaching a record USD 107 billion in 2015. This is more than three times bigger than it was only 10 years ago," he said.
Moreover, US bilateral investment to India has grown from a mere USD 8.5 billion in 2005 to over USD 35 billion last year, he added.
Last week, the government announced major FDI reforms aimed at boosting greater investment flows in to the country. Under the new rules, 100 per cent FDI is allowed in civil aviation, defence and e-commerce.
Noting that the reforms India is undertaking are not going unnoticed by the US firms, he said American member companies of the US-India Business Council announced plans to invest USD 45 billion over the next two to three years.
He also said the number of Indian companies operating in the US stands at an all-time high and they have invested some USD 15.3 billion.
Citing an example of Aurobindo Pharma setting up a facility in Durham, North Carolina, he said the top 100 investments now employ some 91,000 American workers.
"Both governments have also taken important steps to help facilitate greater economic growth and investment. For example, we elevated our economic ties by holding our first-ever Strategic and Commercial Dialogue last year. This year's Dialogue will be held here in New Delhi at the end of August, and our delegation will be led by Secretary Kerry and Secretary Pritzker," he said.
In an effort to identify and support the best innovators in both the US and India, the two countries also agreed to co-host next year's Global Entrepreneurship Summit, he added.
With regard to ease of doing business, he said India has
made good progress on taxes.
"We appreciate what the Prime Minister and Finance Minister have said about the end of retroactive taxation - it was an important message," he said.
The US also has been able to resolve dozens of old tax cases with the Finance Ministry, and recently entered into an advanced pricing agreement with the government, which allows for even greater certainty and predictability from a tax perspective for companies entering India, he said.
On the legislative front, he said the US appreciates the steps taken to reform the bankruptcy code which will help address not only the banking sector's concerns about non-performing assets, but also improve the business environment by allowing companies dissolve a business in a timely and efficient manner.
With regard to enhancing IPR protection, which is a necessity for attracting greater foreign investment, he welcomed India's recently released IPR policy as a step in the right direction towards nurturing a culture of innovation and entrepreneurship.
On increasing pace of bilateral trade, Verma said, there is need to further liberalise markets and to improve investor confidence.
"One area where I would like to see greater progress is in our ability to launch negotiations on a bilateral investment treaty (BIT). We have been on-again off-again for about 8 years in our pursuit of a treaty. And I am afraid things have become a bit more difficult," it said.
In India's recent model draft BIT, there were departures from the high standards that we had seen in other treaties it had negotiated, for example with South Korea and Japan, he said.
"We will keep working to narrow our gaps, but today, unfortunately those gaps do prevent us from moving forward and putting in place the kind of structural protections that investors, in both our countries, have come to expect in international commerce," he said.
With regard to mega trade pacts, he said, India is reviewing its trade posture and policies now, and it must have a trade policy that addresses its unique history and developmental outlook.
"Similar debates are going on right now around the world. But I hope in the end, further integration into world trading markets and a lowering of tariff and non-tariff barriers is the path India chooses. That's the best way to support worthy initiatives like Make in India, Digital India, Clean India and so much more," he said.
