India budget will spur investment: US chamber

WASHINGTON - A leading US trade association has praised India’s budget, saying it sets forth clear parameters that will spur and sustain greater investment in the country’s infrastructure sector.

“The sheer confidence this budget represents is worthy of our praise,” said Ron Somers, president of the US-India Business Council (USIBC) that represents about 400 US companies and seeks better commercial ties with India.

Indian Finance Minister Pranab Mukherjee’s budget proposals will favourably support greater impetus to invest in the “India opportunity”, it said, noting that India’s economy is one of the world’s fastest growing economies, exceeding an eight percent rate of growth in GDP.

American industry also praised the liberalisation towards foreign institutional investment (FII) in equity mutual funds, it said.

“The opening of the mutual fund industry to FIIs is a step that will serve to mobilise significant amounts of capital and expertise in India’s financial markets,” Somers said.

“This change, along with the raised FII investment limits in some infrastructure bonds and strides leading to a predictable, streamlined investment tax regime, will ultimately bolster India’s efforts to build-out the country’s infrastructure. US industry stands ready to be full participants in this activity,” he said.

US firms read as a favourable indicator the government of India’s stated goal to eliminate bottlenecks in the country’s food distribution system, which may hint at a soon-to-be-announced opening of the country’s multi-brand retail sector, USIBC said.

India’s twin challenges of major food price-rise and inflation can be addressed by improving efficiencies in the farm-to-market supply chain, which will be benefited by inviting into this sector both technology and investment, it said.

“The beneficiaries of modern retail, resulting from improved access to food distribution outlets, will be farmers,” Somers said.

In addition to the ‘hard’ and ’soft’ financial infrastructure attributes of the budget, combined with the prospect of the opening India’s multi-brand retail sector, US industry hails India’s signal to enhance spending in the defence and security sectors, the trade body said.

With India embarked over the next year on a $46 billion upgrade of its military, US firms are eager to partner with Indian counterparts to bring ‘best technology’ to India’s armed forces and security establishment, it said.

(Arun Kumar can be contacted at arun.kumar@ians.in)