Finance chiefs from the United States and India pledged on Tuesday to continue efforts to open up India’s financial, retail, manufacturing and infrastructure sectors to competition but offered no specific measures to boost access for American firms.
Wrapping up annual economic talks, U.S. Treasury Secretary Timothy Geithner said Washington and New Delhi would deepen their discussions on ways to modernize India’s financial sector, finance its infrastructure needs, and provide access to U.S. retailers like Wal-Mart.
“The single most important takeaway is the commitment of both governments to work very hard to expand and deepen this relationship and make sure that Indian companies and American companies are benefiting even more than they already are from these tremendous opportunities ahead,” Geithner told a news conference.
Wal-Mart and other major retailers have tried in vain for years to enter the Indian market, which is dominated by individual shopkeepers and small-scale firms.
Both Indian and U.S. officials say the improved cold storage and distribution facilities from large-scale international retailers would ease supply bottlenecks in India’s economy and temper food price inflation.
Geithner acknowledged that reducing barriers to foreign firms in India was politically challenging.
“American companies still face barriers in India in sectors such as banking, insurance, manufacturing, multi-brand retail and infrastructure,” he said. “Easing those barriers, which are limiting economic growth and job creation in both our countries, would be an important step toward integrating our economies.”
The discussions were the second round of annual consultations between the United States and India launched last year in New Delhi. The effort seeks to foster closer ties between the world’s largest economy and one of the world’s fastest growing emerging markets.
Indian Finance Minister Pranab Mukherjee called the discussions “fruitful” and said the level of interaction between U.S. and Indian officials had “increased substantially” since the last round of talks. He added the two sides had formed specific working groups to tackle a range of subjects.
The two ministers also said they would continue to strengthen cooperation on common economic goals, such as reducing global trade imbalances through the Group of 20 bloc of major economies.
Discussions of how to handle China’s tightly managed yuan currency came up, Geithner said, adding that he wanted recent progress toward yuan flexibility to continue.
“As you’ve heard us say for a long time in Washington, we think it’s important for the world economy, certainly for China’s broader challenges in managing inflation pressures that we see China move over time towards a more flexible exchange rate system,” Geithner said. “That’s happening against the dollar, we’d like to see that continue.”
Geithner told a business forum on Monday he believed India’s economy had outgrown its financial system, and India needed deeper and more liquid capital markets to finance the $1 trillion of infrastructure spending over the next five years.
He said he wanted U.S. financial firms to have more access to what is likely to be a rapidly growing financial services sector, and believes they can bring needed expertise.
Mukherjee said at the same forum on Monday that India had set up a commission to rewrite the country’s financial sector laws to “bring them in harmony with the new liberalized environment in the country and in keeping with global best practices.”
The United States wants to make India one of its top 10 trading partners in the next years.
Currently, bilateral trade between the two countries is about $49 billion annually, just over a tenth of the $456 billion U.S. bilateral trade with China, the United States’ second-largest trade partner after Canada.
(Editing by Neil Stempleman)
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