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The US today described India as one of the "growing engines" of world economy with an enviable growth rate and said the bilateral ties were progressing in a "great direction". "Now we have India growing at 9 per cent per year. The country is one of the growing engines of world economy, US Ambassador Timothy Roemer said addressing a function to celebrate the American National Day.

Reflecting the growing convergence in the relationship, he said the ties between the two countries were progressing very overwhelmingly as cooperation and collaborations are happening in diverse areas. “There is so much progress in the relationship in the last few years...It is growing in a great direction, " he said. Roemer said that after appointing him as Ambassador of India, President Barack Obama had asked him to "shake hands with the billion people in the country" and the piece of advice i s "beginning to work".

Addressing the gathering at the Embassy, Foreign Secretary Nirupama Rao said "three successive US presidents in this century had made vast personal contribution towards transformation of India-US relationship." "I had just returned from a very productive visit to United States. It underscored once again not just the quality and level of India-US engagements but also unparallelled breadth and diversity in our relationship," she said. "The excitement and the energy in our relationship comes from the shared democratic values, the common celebration of pluralism, the energy of our youths, the dynamism of our open societies, the power of innovation, the potential of our economic partnership, the growing conversion of our interest and responsibility of our shared commitment to global peace and prosperity," she said.

 

India close to decision on opening up retail sector to foreign investors?

India's Trade and Industry Minister said that talks to open up the country's multi-brand retail sector to foreign investors were at an advanced stage, but he did not give a deadline. "We are very seriously engaged, " Anand Sharma told Reuters in an interview in Kuala Lumpur. "It is receiving attention of the government in a most serious manner...it is in a very advanced stage of discussion."

Moves to open up the $450 billion retail sector to foreign investment have been pending for years, but Sharma's comments are a strong signal that a decision could be made soon. "The inter-ministerial consultations have been held and the senior ministers are discussing this," he said. Sharma's ministry released a discussion paper on opening up the multibrand retail sector last July, and the issue is being closely watched by retail giants likeWal-Mart , Carrefour andTesco .

India, Asia's third-largest economy with a population of over 1 billion people, allows 51 percent foreign investment in singlebrand retail. Overseas investment in multi-brand retail -- modern supermarkets -- is only allowed in wholesale or cashand- carry outlets. Wal-Mart, which runs cash-and-carry stores in India, has said it is ready to open hundreds of retail outlets as soon as the rules are liberalised. While the move could create jobs and reduce waste, it could drive millions of small shopkeepers out of business.

 

Long-term investors toughing out India graft scandals

Corruption scandals have consumed Indian political life, wrecked its parliament's work and rattled its markets, but they will not stop long-term investors ploughing money into the country. More than $80 billion may have been lost to the state in separate mobile and satellite bandwidth scams, if claims are accurate. Even Indians inured to constant low-level corruption are angry, and the opposition is gunning for market-friendly Prime Minister Manmohan Singh, who heads a fractious coalition.

Foreign investors spending money on the infrastructure, industry and commercial projects that are modernising Asia's third-biggest economy, and many with cash in its stock market, are looking a few steps further ahead. "The specific concern across the board is that the scandals will undermine the current coalition and force a general election," said James Winterbotham, director of corporate finance advisers India Advisory Partners.

That, he said, would be "hugely disruptive, will skew public spending towards populist and vote winning measures -- but the elephant will continue to march on." Though it has the numbers to pass the budget later this month, the government has been completely derailed from its legislative agenda by dealing with scandal after scandal.

"Parliament has been paralysed. Any new legislation which was to come, that is not coming," said D.H. Pai Panandiker, head of New Delhi-based private think tank RPG Foundation. "That is how the government gets affected. This affects policymaking." He said rather than the government collapsing over the issue, Singh's administration was likely to limp on.

This does not change the fundamentals that make India attractive to investors. India reckons its economic growth for the 2010/11 fiscal year will be 8.6 percent, way ahead of Europe and the United States, and its 1.2 billion population is forecast to exceed China's in 15 years, meaning internal demand for goods and services will carry on rising.

Still, foreign direct investment (FDI) fell to $19 billion in 2010 up to November, down from $25 billion in the comparative period of 2009, according to Indian central bank data. The bank blamed the decline on the environment ministry's opposition to mining and construction projects. If that was the main reason, recent moves may signal a reverse is likely. Indian authorities last month gave the go-ahead, after three years of delay, to a $12 billion steel mill to be built by South Korea's POSCO , the biggest single foreign direct investment in India. POSCO, world number three steelmaker, wants access to India's market, which is growing while demand from mature economies slows. "I am not aware of major FDI projects being deferred on account of the corruption scandals," IAP's Winterbotham said.

For years, investors have been resigned to corruption as part of the Indian commercial landscape. "If you are a company looking at going into India, you have to look at these issues and you have to do your due diligence," said Richard Heald, chief executive of the UK India Business Council, which promotes trade between Britain and India. Britain is one of the top five direct investors into India, and its prime minister, along with heads of state from China, France, Russia and the United States, was one of many high-profile leaders to visit India in the past year to boost trade.

With India's economic growth, and with the spectacular amounts alleged to have been skimmed off, is coming greater clamour to clean up.

   

India likely to seek G20-support against tax havens, black money'

India will seek strong action by the Group of Twenty (G20) nations against tax havens as it feels any unilateral action can act as a deterrent against foreign investment. “Multilateral action is more effective, ” a finance ministry official said, ahead of the meeting of G20 finance ministers and central bankers in Paris.

India will urge the G20 to pressure tax havens into revealing more information on black money from India, the official added. Prime Minister Manmohan Singh's government is under pressure to bring back illicit funds stashed abroad, but finds itself facing jurisdictions with which it has little leverage.A report by Washington-based think-tank Global Financial Integrity (GFI) puts such fund flows at about $16 billion a year from 2002-2006.

“Any form of curbs on a country cannot work at unilateral level, as such an action can discourage foreign investments,” the official said. India has already made a strong pitch for tax information exchange agreements (TIEAs) with greater teeth at the G20 to facilitate a meaningful exchange of information on fund flows and monies parked in such jurisdictions.

The G20 is a group of systemically important industrialised and developing economies that has emerged as the premier forum for cooperation on economic issues after the financial crisis of 2008. The G20 meet in Paris will discuss the reform of the international monetary system. Some jurisdictions have privacy protection laws that hinder information exchange on tax evaders.

“The idea is to generate enough pressure on the issue globally to ensure joint action,” the official said. Independent experts also favoured such an approach. “Multilateral forum is a better option for India to exert collective pressure on the concerned tax havens. This has also been favoured by the OECD, which has taken the lead by forging G20 initiative in this regard,” said Sudhir Kapadia, tax market leader at Ernst&Young.

The official said it was because of multilateral action that a number of tax jurisdictions, including Switzerland , had agreed to share information on bank accounts of tax evaders. New Delhi is pursuing the issue at the steering group of the Global Forum on Transparency and Exchange of Information for Tax Purposes at the Organisation for Economic Cooperation and Development or OECD, of which it is a member.

The official said the peer review process underway at the OECD to examine domestic tax laws of all jurisdictions was aimed at increasing global pressure on everyone to act. India is the vice-chair of the peer review group, where it plays an active role in assessing quality of information exchange permitted by domestic tax laws of different jurisdictions. It has already presented a paper at the forum that seeks domestic laws that are supportive of information exchange on evaders.

The official said the OECD should not merely stop at labelling such tax havens as non-cooperative but also pressure them to change their domestic laws. However, this has not meant that India will not take up the issue bilaterally. It has prioritised 22 countries or jurisdictions for negotiation under the TIEAs. It has already signed pacts with the Isle of Man, Bermuda, the Bahamas, and the British Virgin Islands. India is also upgrading its double taxation avoidance agreements with several countries, after revising its treaty with Switzerland, for greater information exchange.

More than 500 such bilateral pacts have been signed so far after the G-20 pledged to crackdown on tax havens at the London summit. The OECD has released a list of such tax havens based on compliance with international tax standards.

 

IndianSME scan collaborate with US counterparts

The Indian Government said Indian small and medium enterprises (SME) can collaborate with their US counterparts in the field of agriculture, IT and healthcare to help each other in production and marketing of their products.

"The SME initiatives presents a win-win opportunity for both the nations... Like in India, IT, agriculture, health, entertainment and education are the priority sectors which can be tapped by the US SMEs," Minister for Micro, Small and Medium Enterprises (MSMEs) Virbhadra Singh said at an Indo-American Chamber of Commerce function.

Stressing on the need to make small units more competitive and encourage them to produce higher value-added products, he said, one of the strategy to overcome these obstacles is through promotion of cluster development with the help of the US companies. "This facility will help in mobilisation of financial and human resources, enabling small enterprises to climb up and grow,".

The SMEs in the country face various problems like credit crunch, less technical know-how and lack of research and development facilities. Besides, the minister said, the US and India can cooperate in integrating American and Indian small businesses into the global supply chain. This initiative would expand trade and create jobs in both the countries. The MSMEsaccount for 45 per cent of the country's manufacturing output and 40 per cent of exports. The sector employs 50 million people in 26 million units producing over 6,000 products.

   

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