U.S. Vice President Joe Biden called on India to further open its economy to foreign investment and improve protection for intellectual property to help drive a possible fivefold increase in trade between the nations.
The experience of developed economies shows that the best way to boost growth is to open to the world, Biden said in a speech to business leaders at the Bombay Stock Exchange today during the first visit to India by an American vice president in three decades. Hundreds of millions of Indian consumers deserve access to the most affordable products, he said, and a graduate wanting to start the next Tata Motors Ltd. should be able to buy the best parts available wherever they are made.
“It is a little bit like as my mother used to say: ‘You have to take your medicine in order to be healthy’,” Biden said. “You have an extraordinary opportunity to unleash the immense talents of the people of India in the global economy and power India’s growth for decades to come.”
The U.S. is pushing India, Asia’s third-largest economy, to remove remaining investment caps in sectors including finance, retail and insurance. The government of Indian Prime Minister Manmohan Singh, serving the final year of his second consecutive term, this month proposed to ease FDI limits as part of efforts to woo long-term capital after the local currency touched an unprecedented low against the dollar on July 8. Foreign-direct investment slid about 21 percent to $36.9 billion last fiscal year compared with 2011-12.
Efforts to throw open pension and insurance funds have been opposed by smaller parties within India’s parliament that Singh might need to push the measures through. The economy grew at a decade-low 5 percent last fiscal year.
Pacts meant to boost economic ties have foundered. A landmark 2005 agreement on cooperation in civil nuclear energy, for example, has failed to deliver business for U.S. companies wary of Indian rules on compensation claims in the event of an atomic accident.
Bilateral trade could rise fivefold from the current $100 billion, Biden said as he nears the end of a four-day trip to India. His visit, a month after the arrival of U.S Secretary of State John Kerry, is aimed at improving U.S-India ties and laying some of the groundwork for a summit between Singh and President Barack Obama later this year.
After delivering today’s speech he will meet with business leaders at the Taj Palace Hotel in Mumbai. Yesterday, Biden held talks with Singh, President Pranab Mukherjee and Sushma Swaraj, a leader of the opposition Bharatiya Janata Party. He leaves for Singapore tomorrow.
Steel companies ArcelorMittal and Posco put more pressure on Singh last week when they announced they were scrapping steel projects valued at $12 billion in India because of delays in getting land and mining permits.