The Hindu Business Line : Micro managing projects will hinder FDI: Mulford

Trade and investments are linked and the problems faced by the US power companies here undermine the image of India as a happy home for investments, according to Mr David C. Mulford, US Ambassador to India.

Addressing a meeting organised by the Confederation of Indian Industry here on Thursday, Mr Mulford touched up on potential areas of cooperation and the issues which, if addressed, would bring the business communities in the US and India closer.

In response to a question on US investments in infrastructure, Mr Mulford said that US companies see investments in infrastructure in India as risky. There is strong political interference in long-term commitments. There has to be a greater awareness that more the micro management then less the interest in investment. That is why companies go to China even though India is a better place to invest in the long term, he said.

People go to China despite a `monolithic government that is yet to resolve free market issues.' The financial system in China is fragile and it is not commercially based and the currency regime is yet to be resolved. But "the process of going into China has been made attractive and easy," he said.

He said that the US private sector has a great deal to offer but can do that only if allowed to fully get into India. Unresolved disputes, restructuring of retail and features in the financial sector that inhibit growth have to be addressed. While the commitment to reform is a positive feature it is important that it continues at a more rapid pace.

In the financial sector, banking continues to be heavily owned by the Government and is not fully competitive and foreign banks are restricted. A country with one of the highest saving rates has a poor system for mobilising the resource, he said.

The US was committed to assisting India in expanding its civil nuclear power facilities. But India would have to separate civil nuclear utilities from military, be open to international inspections and maintain existing commitment against testing.

The US President has made a "clear, unambiguous, positive and committed statement" in extending support to India's civil nuclear programme. In Defence sector, though India is one of the largest markets the US has a small slice. While the military relations forged over the last few years continue to grow he hoped that the willingness of the Government to look at US products also increases, he said.

He acknowledged that there is a worry that US is not a consistent supplier because of fears of sanctions and restrictions on high-tech transfer. But that is being liberalised — the US has authorised Boeing and Lockheed to bid in India for multi-role aircrafts, he said.

Also, an attraction for India is the `genius for business ventures' that the US companies have. It offers a chance for joint production and technology transfer. But the problems need to be overcome. It is not surprising that US has a trade deficit with India.

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