Washington DC – The recent diatribe of US President Barack Obama against the Indian investment climate drew subtle applause from the business community, while Indian political parties across the spectrum reacted with expected anger and self-justification of domestic policies of protectionism.
In a statement to India America Today, the US India Business Council (USIBC), the principal interlocutor for industry operating in the US and Indian marketplace, said, “USIBC continues to advocate on behalf of our membership, to both governments, to create business friendly policies that promote economic development and increased trade.”
Noting that USIBC had been working for 37 years,”to deepen trade and strengthen commercial ties between the United States and India,” the statement issued in Washington, DC added, “We remain committed to a positive growth story for India and the creation of jobs in both countries.”
In a recent exclusive interview with India America Today, Adi B. Godrej, President of the Confederation of Indian Industry (CII) and Chairman of the Godrej Group, one of the largest family-owned businesses in India, candidly admitted the need for reforms and governance in India, as the Indian economy and businesses were passing through difficult times.
“I think from the US side, the challenges are some of India’s regulations which restrict investments in certain fields — for example Foreign Direct Investment (FDI) in multi-brand retail, investment in the aviation sector in India by airline companies outside, and such other cases,” Godrej told IAT.
During a recent visit to Washington, DC, Indo-American Chamber of Commerce (IACC) National President Anand Desai had echoed the need for governmental action on formulating a policy on the retail sector.
“Coming to retail, I think it’s a more complex issue, because there are a large number of people in India earning from small retail. How much of that is going to be adversely affected is a policy issue to decide,” said Desai in an interview with IAT, adding, “Somebody has to sit down and do the analysis. So my own understanding is political pressure.”
On the other hand, the Polit Bureau of the Communist Party of India (Marxist) in a statement said it “objects to the remarks made by President Obama that India open the doors to Wal-Mart for retail trade and other American investments in India.”
Calling the statement by Obama “a brazen attempt to pressurize the UPA (United Progressive Alliance) government to adopt such steps as opening multibrand retail to FDI,” the CPI (M) statement said, “The Manmohan Singh government should not succumb to this pressure.”
“The CPI (M) wants the government not to open up retail trade to foreign supermarket chains which will endanger the livelihoods of lakhs of small shopkeepers and traders,” cautioned the statement.
Reiterating the oft-repeated tactics of blaming the foreign hand for all its domestic woes and other criticisms, one of the top Government of India ministers pointed his finger at multinationals for misleading President Obama.
Addressing journalists in Bangalore, the Indian Silicon Valley, Indian Corporate Affairs Minister Veerappa Moily said, “Certain international lobbies like Vodafone are spreading this kind of a story and Obama was not properly informed about the things that are happening, particularly when India’s economic fundamentals are strong.”
Negating the criticism from President Obama about the difficulties faced by US businesses in investing in India due to restrictions on foreign capital inflow in retail and other sectors, Indian Commerce and Industry Minister Anand Sharma called the Indian policy regime investor-friendly.
“He has every right to convey what his perceptions are, but the policy-making is a sovereign decision and India’s Foreign Direct Investment policy regime is investor-friendly,” Sharma said about Obama’s comments, adding, “There is always a difference between perception and reality. India remains one of the most attractive destinations for foreign investors, with most sectors open for FDI.”