Business Daily from THE HINDU group of publications
Thursday, Oct 15, 2009
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Business Daily from THE HINDU group of publications Thursday, Oct 15, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Opinion
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Editorial Driving a bargain The bilateral treaty with the US under negotiation provides India the opportunity to bargain for easier access for the services sector into America. Amidst all the other distractions in the political and economic relationship with the US, it is a relief that one crucial component is finally making headway. The Bilateral Investment Treaty was first mooted in January 2008 under the Bush Administration but got nowhere till June this year. Now at a workshop organised by the Confederation of Indian Industry (CII), the US Ambassador, Mr Timothy J. Roemer, was optimistic of the treaty being formalised soon; on that agreement between the two countries India can expect, he said, considerable direct investments. That might be easier said than done. The bilateral treaty idea was mooted by the US-India Business Council, an advocacy group representing 275 of the top US companies interested in India, after the landmark Indo-US nuclear deal that opened up the possibility of unexplored business ventures in and for India. Formal discussions between the two countries have only just begun, and much as firms in both countries would like the two countries to get closer, a great deal of spadework will have to be done before the two governments can build anything tangible. Of major concern to the Americans is the complex nature of the investment screening process that shelters a domestic economy from overseas competition reinforcing high tariffs that are already in place. That is why they would like “pre-establishment national treatment”, a privilege that frees investments from the Foreign Investment Promotion Board, national or inter-ministerial group approvals. In the slew of bilateral treaties India has, foreign investors are given “post-establishment” rights and protection under existing laws applicable to domestic investments. At the CII meet Mr. Roemer was probably referring to such barriers as delays in regulatory approval of one kind or another and the need for some kind of protection or compensation. On deeper reflection, the Americans might have a point about the need to ensure that regulatory delays do not lead to opportunity costs for the investors; that critical issues holding up core sector projects, land acquisition for instance, are sorted out expeditiously. The infrastructure is a big draw for foreign investors in general and more than earnest policy statements are required to get the investors to put their money down. The bilateral treaty process provides the policymaker with two unique opportunities; one is to drive a hard bargain for easier access into America for India’s competitive services sector and second, to clear the thicket of confusion and arcane regulations that have so far clogged investments in the core sector. India, US sign pacts on civilian satellites, defence equipment Global trade in a time of crisis More Stories on : Editorial | Foreign Trade
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