In her first public speech after being appointed US ambassador to India, Nancy Powell criticised the Union government for “several recent policy decisions that cause significant concern and dampen India’s investment climate sentiment”.
“The adoption of manufacturing policies discriminatory to foreign companies and the inclusion of retrospective tax provisions in the Finance Bill are two examples” she said.
Unlike former US ambassador to India Robert Blackwill, who characterised Indo-US business relations as “flat as a chapatti”, Powell said things were not that dire. “When I left India in 1995, the value of US goods exports to India hovered just above $3 billion. Last year, our goods exports topped $21 billion. Our bilateral trade in goods and services is expected to touch $100 billion this year. India leaped from our 25th-largest trading partner to our 13th-largest trading partner in just over a decade. In 1995, US FDI (foreign direct investment) into India was negligible. It now stands at about $30 billion. Equally impressive is the fact that Indian FDI into the US now tops $3 billion,” she said.
However, Powell said the challenges to trade and investment remain. These include “high tariff and non-tariff barriers, restrictions on foreign investment, lack of transparency, and defence offset requirements”. She also added retrospective tax amendments and discriminatory manufacturing policy issues to the list.
Last week, Finance Minister Pranab Mukherjee met US Treasury Secretary Tim Geithner. Powell said at the meeting, Geithner asked Mukherjee for an assurance on the face that India would continue to welcome foreign capital by advancing important economic reforms that would increase opportunities for bilateral trade and investment. Some of these reforms—voting rights for banks and reforms in pension and insurance sectors—are now being taken up by Parliament.