The US and India are working on a bilateral mechanism that will help ease flow of investments from American companies into infrastructure projects in India.
The proposal, which has been made by the US Department of Commerce, will establish a platform to assist US investors in infrastructure navigate through regulatory and procedural hurdles in the country, an official in the Department of Industrial Policy and Promotion (DIPP) told BusinessLine .
A Memorandum of Understanding (MoU) on ‘cooperation in infrastructure investments’ is to be signed by both countries during Prime Minister Narendra Modi’s visit to the US next month.
“We have sent back a communication to the US Department of Commerce indicating our willingness to go ahead with their proposal and have also given some inputs from our side. We will start work on a Cabinet Note for the same as soon as the US reverts,” the official said.
India needs investments worth $1 trillion in the infrastructure sector, which offers huge opportunities to foreign investors. Foreign funds can flow into the ambitious road sector projects carried out by the National Highways Development Programme, the industrial corridors being developed, the railways, where foreign investment rules have recently been liberalised and power sector projects.
“American companies want to bid for project contracts and also supply more equipment. They want to explore the PPP (public-private-partnership) model. But they also want some hand-holding,” the official added.
The hurdlesProblems in land acquisition and delayed clearances from all relevant departments, including environment and forest, are seen as major irritants by foreign investors.
Earlier this year, Nisha Biswal, US Assistant Secretary of State for South and Central Asia, openly criticised India for ranking 134 out of 189 countries in a survey on best countries to do business with. She said despite India targeting $1 trillion in infrastructure investment, its policies still inhibited foreign investment.
“The bilateral mechanism would provide a platform where American companies can not only discuss opportunities with Indian officials and businesses, but also discuss problems and how to get around them,” the official said.
The US was India’s top export market last year. FDI flow from the country was to the tune of $806 million during the year, which was just 6 per cent of the total FDI.