US to focus economic dialogue on India's vast potential

Washington - A high-level India-US  economic dialogue here  next week will seek to tap vast opportunities offered by one of the  fastest-growing economies in the world as the two countries have agreed to fast track technical negotiations for an early conclusion of a bilateral  investment agreement.

Finance Minister Pranab Mukherjee and US Treasury Secretary Timothy Geithner  will lead the high-level economic dialogue.

The second annual meeting of the US-India Economic and Financial Partnership  will focus on infrastructure development, capital markets reforms,  cooperation on the Group of 20 efforts to reduce trade imbalances, and  efforts to combat money laundering, a senior US Treasury official said Wednesday.

The US official said removal of trade barriers to investment in India, closer economic cooperation and greater market access would help make it one  of top-10 US trading partners.

"Our partnership seeks to unlock an enormous untapped potential in our  relationship," he said.

"Given the relative size of our two economies, we still have major  opportunities to expand our trade and investment linkages to the benefit of  both countries," said the official in a background briefing.

Besides rampant corruption, which was "an impediment to investors looking to  commit substantial sums of money", one of the key challenges is encouraging  India to foster a more certain and established regulatory and legal  structure that won't leave investors guessing, the official said.

Also on the agenda would be tackling terror-financing and trying to better  align economic policies in the context of the Group of 20 nations talks, he  said.

One area for discussion will be ways to open India's "relatively closed"  capital markets and banking sector to foreign investment, the treasury  official said.

"It's an issue for India as it seeks to maximise its growth potential. It's  clearly important for India to develop long-term capital markets to provide adequate financing for infrastructure, which is a major constraint to  India's growth," he said.

The biggest opportunity for US companies is India's massive need for  infrastructure development, where firms can provide expertise in  engineering, financing and the capital equipment needed for the ports,  expressways, airports, railways and power grid that India needs to improve  the efficiency of its economy, the official said.

Federal Reserve chairman Ben S. Bernanke and Securities and Exchange  Commission chairman Mary Schapiro and Commodity Futures Trading Commission  chairman Gary Gensler will also participate in the talks with Indian  officials, he said.

The two countries have also agreed to reinvigorate the Trade Policy Forum  "to make it more robust and effective in resolving bilateral commercial  ties", Indian Commerce and Industry Minister Anand Sharma told reporters  Wednesday after a "very productive" meeting with US Trade Representative Ron  Kirk.

There would be two rounds of negotiations on the bilateral treaty before the  next meeting of the ministerial level Trade Policy Forum  expected to be  held in India in October, he said.

Noting that the bilateral trade in goods and services had exceeded $85  billion, Sharma said the talks focused on "what India's growth story stands  for and what needs to be done to nurture US-India ties" as he apprised Kirk  of various policy approaches being taken by India to sustain its high growth  rate.

As he highlighted the opportunities offered by India's growth for the US  businesses to develop partnerships with Indian private sector, the minister  said he had also raised issues of concern for the Indian industry in their  business operations in India.

Kirk, according to a USTR release, acknowledged that "the booming bilateral  trade and investment flows between the United States and India support tens  of thousands of critical jobs in both countries, and we know that will only  grow significantly in the coming years".

"However, to continue and grow our successes both India and the United  States must take concrete steps to resolve long-standing market access and investment concerns," he said.

On the World Trade Organisation Doha Round, Sharma and Kirk "recognised the  challenges that remain in ongoing discussions but expressed their commitment  to exploring options for productive next steps," USTR said.