American companies will invest in India as soon as there is an improvement in business climate like clarity in tax policies and streamlining of “complex” regulations, a top Obama administration official has said.
“US companies are optimistic about doing business in India. They see the reforms as a positive sign of India’s willingness to make the needed improvements to its business climate,” said US Assistant Secretary of Commerce for Global Markets, Arun Kumar.
With roots in Kerala, Kumar is also Director General of US and Foreign Commercial Service and one of the top ranking Indian-Americans in the outgoing Obama Administration.
“Given the growth potential of the Indian market, US companies will be monitoring the situation closely over the next year to see how these reforms are implemented,” he said.
Specifically, US companies will be eagerly following the implementation of GST to see if it provides greater predictability and consistency in the application of taxes, he said.
Kumar said US companies will also be interested to see progress in implementing the 25 recommendations made at the 2016 US-India CEO Forum, which offered suggestions for opening up trade and investment in diverse areas ranging from healthcare to energy to defence.
Responding to a question, Kumar said while US companies have responded positively to these reform efforts, they will continue to seek improvement in business, climate issues such as clarity in tax policies, less burdensome regulations, and protection and enforcement of intellectual property rights.
“Companies working in India’s infrastructure sector note that the permitting process is often confusing and inefficient. Some report that they need to obtain as many as 110 clearances before starting a project,” he noted.
“Streamlining India’s permitting process and reforming land and labour regulations can help to unlock new investments in India’s infrastructure and smart cities sectors,” he said.
In addition, companies seek a more transparent and predictable policy environment, including consistent notice and comment procedures in the rule-making process, in order to plan investments and inform long-term business decisions, he added.
“We should also focus on encouraging open trade and investment policies with a goal of enabling India to be seamlessly integrated into global supply chains,” he said.
In a wide-ranging interview, Kumar appeared bullish on India-US trade and business relationship.
“The big picture is that we enjoy a thriving trade and investment relationship. In 2015, US-India bilateral trade reached $109 billion, up from $37 billion in 2005,” he said.
(With PTI inputs)
