America welcomes Indian reforms
NEW DELHI, India — US Treasury Secretary Timothy Geithner yesterday welcomed a burst of economic reforms in India which open the door wider to foreign firms, after criticising a deteriorating investment outlook in April.
Washington, which is keen to forge closer diplomatic and commercial links with India as an ally in Asia, has been pushing for greater access for its companies in the vast and largely untapped South Asian market.
The reforms are "obviously very promising", Geithner told a news conference in New Delhi after he and his Indian counterpart, P Chidambaram, held the third annual meeting of the US-India Economic and Financial Partnership.
"They (the measures) will be welcomed around the world" and "will help provide stronger economic growth and stronger growth
in the private sector", Geithner added.
The meetings are part of a newly evolving economic alliance intended to boost commercial ties, often eclipsed by US trade with China.
The latest talks came after Premier Manmohan Singh's Congress-led government in September opened the retail, broadcasting and aviation sectors wider to foreign companies and just last week proposed bigger overseas investment in the insurance and pension industries
as it seeks to spur a flagging economy.
US supermarket giant Walmart intends to be one of the first companies to benefit, saying it will open its first store for consumers in the next 18-24 months. It already operates as a wholesaler in India.
Before the reform blitz, many US businesses were disappointed by the pace of liberalisation in India and in April Geithner criticised proposed steps to chase overseas firms for taxes on mergers involving Indian assets.
He said the move had "dampened enthusiasm about India's investment climate".
But India's reform- minded Finance Minister Chidambaram, who took over in July, has changed what observers have called the foreign investment "atmospherics", and has said the proposed tax laws will be reviewed.
Even though there is no certainty some of India's new measures — such as hiking foreign investment caps in insurance and pension ventures — will be cx approved by parliament, Geithner hailed India's new reform moves.
"I understand the political challenges ahead," said Geithner, who is on his two-day India visit accompanied by Federal Reserve Chairman Ben Bernanke.
"But I feel encouraged by the initiatives undertaken by the Indian government to engender more confidence, to generate more investment.
"It is good to be here when there is so much that is fresh in the air," he said.
India's finance minister Chidambaram said the pair had held "fruitful talks".
He voiced worry that the recent third round of quantitative easing — or QE3 — by the United States could jack up commodity prices, but added some of the money generated could also come to India as much-needed investment.
Geithner, who spent part of his childhood in India, and who has long pressed New Delhi to prise open further its markets to US investment, was due to go to financial hub Mumbai on Wednesday.
Later he will travel to Tokyo for the IMF-World Bank meetings.