American Businesses Applaud New Delhi for Big Bang Reforms

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Washington, DC – American corporate quarters welcomed on Friday the news of the beleaguered Indian government’s approval of the opening of India’s multi-brand retail sector to foreign direct investment (FDI), and the increasing of equity caps in civil aviation, broadcasting, and power trading exchanges.

Commenting on the announcement, Ajay Banga, Chairman of the US-India Business Council’s (USIBC) Board of Directors, said, “The reforms approved by the Cabinet today are a welcome signal to investors everywhere.”

Banga, who is the President & CEO of MasterCard Worldwide, applauded “the (Indian) government’s bold actions that will help create a predictable investment and business climate.”

The Indian Ministry of Commerce and Industry also announced a high-level group, to be constituted under the Minister of Consumer Affairs, “to look into various aspects relating to internal trade, to make recommendations on internal trade reforms to the Government, whenever required.”

“This is in response to a demand articulated by traders’ associations during the course of consultations,” it added.

The Indian government had been dragging its feet, as economic charts were nose-diving amid serious concerns for the health of the economy. USIBC aptly noted, “The government’s courageous resolve to move on these complex reforms serves as an assurance to investors that its economic liberalization agenda is back on track.”

“These big bang reforms send a crystal clear signal that India is open for business,” said Ron Somers, President of USIBC, which is comprised of 350 top-tier US and Indian companies.

“Opening the multi-brand retail sector to foreign direct investment will drive the modernization of India’s expansive agri-retail marketplace. India’s supply chain infrastructure will see improved efficiencies and expertise, consumers will benefit from increased quality and choice, and inflation and rising food costs will be tamed,” noted Somers.

India’s ailing airline sector is also set to get a boost with the government’s decision to allow foreign carriers to buy a 49 percent stake in Indian private airlines. “Raising the equity cap presents an opportunity for US carriers to be a part of India’s remarkable growth in passenger traffic over the next decade,” said USIBC.

Noting that FDI in all broadcast-carriage services has increased from 49 to 74 percent, USIBC predicted, “This will provide industry with the leverage it needs to help fund India’s digitization plan.”

USIBC further welcomed the decision to permit foreign investment of up to 49 percent in power trading exchanges.

With Banga describing the approval as “a win-win for everyone,” USIBC stated, “India’s power exchanges will benefit from the introduction of global best practices, new technology, and capital infusions, which will facilitate the transfer of power from surplus to deficit regions and improve grid stability and reliability.” (IATNS)

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