Ordinance is a signal not a solution, says USIBC president

US-India Business council president Diane Farrell in New Delhi. Photo: Meeta Ahlawat

'The U.S. investors are hoping to place their bets on India, but still have a "watchful attitude" on reforms here'

The U.S. investors are “hoping to place their bets on India”, but still have a “watchful attitude” on reforms here, says US-India Business Council president Diane Farrell. Ms. Farrell, who is in India ahead of the CEO Conclave that will be addressed by President Obama and Prime Minister Modi, also said that the “ordinance route” is a “signal of commitment” from the government on economic reforms, but “not the solution”.

USIBC will partner with the Commerce Ministry (DIPP) as well as business chambers FICCI and CII to host the ‘US-India CEO Conclave’ on the 26th of January, which the leaders of both countries will address. “It will be a historic event, to see the two men stand side by side and speak of their joint resolve to see the economic relationship between the two countries to flourish,” Ms. Farrell told The Hindu.More than 600 invitees, mainly CEOs and investors are expected to attend the conclave.

Ms. Farrell called for Prime Minister Modi and President Obama to announce a schedule of talks on the Bilateral Investment treaty (BIT) and an “ambitious target date for its completion” during the visit. While US investors are enthused by the government’s move to push key reforms like Foreign Direct Investment (FDI) in the insurance sector through an ordinance, Ms Farrell said that investors understand that an “ultimate assurance” would only come when there was “parliamentary action”.

“The fact that the government chose to pursue the ordinance route, especially with the insurance FDI, it definitely sends the signal to investors that there is a commitment from the government to see it through. However, the ordinance route is only a temporary measure, so it is a signal but not the solution. So we hope the government is successful in convincing the upper house of parliament to pass it in this next session,” she said.

India and US bilateral trade is expected to touch $100 billion and the governments are now targetting $500 billion by 2020. However, the trade deficit between them has also ballooned past US $25 billion according to 2013 figures.

Significantly, a White House spokesperson stressed on President Obama’s visit “bringing business” back for the US, as well as enhancing exports as a key target.

"We see it (India) as exactly the type of country that represents the future of American engagement whereby we strengthen our economy by exporting more, but also working more closely on security and political issues," the unnamed official was quoted as saying.