US TRADE OFFICIAL KEEPS UP FDI PRESSURE IN INDIA

A US trade official visiting India has repeated the American line that India needs to increase its 26% limit on foreign direct investment (FDI) to ease the adverse effect on capital flows. Deputy US Trade Representative Karan Bhatia said in New Delhi yesterday that India needed to ease restrictions on FDI in insurance and pension fund management and that she hoped these restrictions would be addressed. US and Indian trade officials are meeting ahead of a visit by Indian Commerce and Trade Minister Kamal Nath to the US next month. The cumulative foreign direct investment by US-based companies in India in 2004 was $6.2bn and grew by 28% in 2004/05. India’s investment in the US was just over $500m and grew by 82.5% in the same period, Ms Bhatia said. The left-wing party allies of the coalition government continue to oppose the proposed increase in FDI in the insurance sector to 49%.