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Despite the recent series of economic reform being pushed by the Indian government, US investors and officials have told a visiting top Indian official that doing business in India is "messy".
"I do understand that many of you may have difficult time in doing business in India. Many of you yesterday told me and I quote, "doing business in India is messy" unquote," the Economic Affairs Secretary Arvind Mayaram said at a reception hosted for him by the US India Business Council (USIBC) yesterday.
At a two-hour long meeting held at the Treasury Department, convened by the Under Secretary of Treasury, Lael Brainard, a select group of American investors, corporate leaders and official gave a free and frank assessment of the current investment climate in India, where they said are eager to pump in their money.
At the end of the meeting, the Indian official pointed out that "we are partners in distress".
Mayaram is here leading an Indian delegation for US-India Economic & Financial Partnership meetings, between the US Treasury Department and Ministry of Finance.
Officials from the Reserve Bank of India (RBI), Security and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority IRDA), and Forward Markets Commission (FMC) and well as their US counterpart organisations have attended the series of meetings held in Washington on Thursday and Friday.
During the meetings and also on the Friday reception, Mayaram assured the investors and US corporate sector that the Indian government is determined to take the necessary hard decision to improve upon the climate of investment and make it business friend as quickly as possible.
"I think, you need to stay the course. You need to be there. We are a work in progress, because we are a developing country. We still need to improve our systems and we will continue to move in that direction. I can assure you that as time goes by, doing business in India will not be as messy as you think it is today," he said.
Diane Farrell, senior director and executive vice-president of USIBC, who participated in the meeting at the Treasury Department, said that it was a very spirited, honest and forthright discussion.
"And the word messy did come up. That is absolutely true. At the end of two full hours, the (Economy) Secretary looked across and said well we are now partners in distress," she said.
"We are partner in your continued and future success," she added.
Brainard said, during the meeting, the private sector participants gave some helpful suggestions on how to make investment environment much more friendly.
In his speech, Mayaram assured US investors that the Indian government is determined to take hard decision to move in the right direction and would continue to review its policy to make them more investor friendly.
"We are on the move once again. As we move into 2013-14, we are going in with great optimism and confidence that we would be able to meet the challenges which are required not only to put the economy back to high trajectory of growth, but also for providing right atmosphere for investors, including foreign direct investors and institutional investors," he said.
Arguing that some "very hard decisions have been taken under very difficult situations", Mayaram said some of the decisions that have been taken has resulted in the kind of change being seen in the Indian economy, the first of which has been the fiscal deficit itself, which has been a great concern to economists and the leadership.
The fiscal deficit has been brought down to 5.2%.
"When the final numbers come, I believe it will be even less than 5.2%. Next year, which is starting on April 1, we are determined to keep it at 4.8%, and then we go down to three% by 2016-17. That is the fiscal roadmap we have set for ourselves," he said.
Mayaram said on the investment side, the credibility of the Indian government was established when the Cabinet cleared foreign direct investment in retail sector.
The Indian government is determined to move on the path of reform, Mayaram said.
Referring to the large number of projects in the infrastructure sector worth $20 billion approved by the Union Cabinet this year, he said many more projects would be cleared soon.
"This will not only create jobs, but would also give impetus for higher growth. This year our growth has been slow between five and 5.5%. The final numbers are still to come.
"But next year we are quite confident that it will be in the region of 6.5% and the next year after that we are hoping that to be somewhere closer to 7 and 7.5%, because the potential growth of India is eight% and we need to reach there as soon as possible," he said.
This year, he said, the government has cut down the subsidies drastically.
"On the correction of diesel prices itself in the next year we would have saved $40 billion. So there is a contraction in the subsidy which are being provided. We are moving towards cash transfers, therefore, they will become more targeted subsidies," he said.