The Hindu : 'Indo-U.S. trade will be set right once FDI flow improves'

Online edition of India's National Newspaper
Saturday, Aug 17, 2002

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National

'Indo-U.S. trade will be set right once FDI flow improves'

By Our Special Correspondent

CHENNAI AUG. 16. The imbalance in the Indo-U.S. trade, now heavily in India's favour, will correct itself once the flow of foreign direct investment (FDI) from the United States to India improves, the Governor of Tamil Nadu, P.S. Ramamohan Rao, said here today.

The sluggishness in actual (as against approved) US FDI in India, normally attributed to the slow pace of reforms in India, is likely to end in the next two years and rapid progress is likely on the reform front, including privatisation, Mr. Ramamohan Rao said.

The Governor said the slow progress of reform since its launch in 1991 was due to the ``hangovers'' of the past that got manifested in opposition from various quarters. Such resistance was inevitable in India, which was the ``freest democracy'' giving scope for a large number of political players, as distinct from the U.S., which was the ``greatest democracy.''

Mr. Ramamohan Rao, who was releasing a book, ``Indo-US Business - Opportunities, Challenges and The Future,'' published by the Indo-American Chamber of Commerce (IACC), said reluctance of U.S. investors to invest in India was blamed by some American spokesmen on lack of transparency in India and failure to honour contracts, as in the case of the Dabhol power plant.

``As a layman, I have not been able to understand how we can afford to fulfil contracts to purchase power at Rs. 5 per unit, when power from other private generators is available at Rs 3. This shows that something had gone wrong,'' he said. More meaningful negotiations on the issues involved rather than blaming each other would help, he added.

Though the Indo-U.S. relations had strengthened in recent times with their strategic partnership with a view to keeping peace in the Indian Ocean region, differences persisted on some issues in the World Trade Organisation (WTO) like intellectual property rights (IPR) and anti-dumping, the Governor said, and expressed the hope that these would be ironed out.

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