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US commerce chief urges further Indian reforms

By: | at 07:00 PM | Channel(s): International Trade  

India must remove obstacles to greater investment in retail, banking and financial services for its “phenomenal” growth to continue, visiting US Commerce Secretary Carlos Gutierrez said on Tuesday.

In New Delhi for two days of meetings, he is expected to study India’s plans to liberalize retailing and encourage it to play a leading role in efforts to make a success of global trade talks.

“Needless bureaucratic hurdles, protectionist policies or caps on foreign ownership hamstring businesses that wish to contribute to this burgeoning market and bring goods, services and increased options to Indian consumers,” Gutierrez told businessmen.

“For India to continue its phenomenal growth it must open all areas of its economy and encourage investment, both foreign and internal.”

Currently, foreign retailers who sell a variety of brands can only operate in India through franchises, or a cash-and-carry wholesale set up with or without an Indian partner.

India’s organized retail sector is largely untapped, and small family stores account for more than 95% of sales.

In November, India’s Bharti Enterprises announced a tie-up with US retailer Wal-Mart Stores.

Britain’s Tesco and France’s Carrefour have also shown interest in entering India but there is growing political opposition to liberalization in the sector from the ruling coalition’s communist allies and some sections of the Congress party.

Gutierrez urged India to ensure strict enforcement of patent laws particularly in pharmaceuticals and software as New Delhi was a major global source of counterfeit medicines, and nearly three quarters of all US software in India was pirated.

“Without protecting patents and data India will not attract research and development and innovation necessary for strong growth in sectors such as pharmaceuticals,” he said.

The US commerce secretary also urged India to play a leadership role in pushing forward global trade talks.

“We are willing to make difficult choices, but we have a shared responsibility to make the (Doha) round a success.”

The key to a trade deal lies in getting deeper US cuts in farm subsidies, which developing countries say give farmers there an unfair market advantage, and in securing similar reforms from the EU, Japan and other big importers on farm tariffs.

Big developing countries such as Brazil and India would have to agree to open their markets, mainly to industrial goods and services but also, in the case of India, to farm goods.

Separately Gutierrez said the White House was working with Democrats to preserve the president’s powers to agree trade deals.

“In the US we hope to continue on the track of opening more markets and are working with the new Congress to renew President Bush’s Trade Promotion Authority, which is currently set to expire at the end of June.” (Reuters)