Asking India to liberalise its foreign investment policies, particularly in the financial services sector, the US today said further opening these areas can add about 1.5 per cent to the country's economic growth.
"India imposes substantial FDI caps in the financial services sector particularly in the insurance sector... insurance penetration is very low (in India)... "You should understand the central role insurance plays in commerce, trade and economic activities. Planes don't fly, ships don't sail in global commerce without insurance," a senior official in the US Commerce Department said here at a CII function.
Michael Camunez, Assistant Secretary for Market Access and Compliance in the US Commerce Department said that liberalising foreign direct investment (FDI) policies will also help in creating funds to invest in the infrastructure sector.
Camunez said that India is going to invest about USD 1.2 trillion in infrastructure sector in the coming years. "If India wants to substantially liberalise FDI caps in its financial services sector, generally it should contribute as much as 1.5 per cent to India's GDP growth, that's remarkable statistics," he added.
The US business houses wants India to increase the FDI cap in insurance sector to 49 per cent from 26 per cent.
The Insurance Laws (Amendment) Bill, 2008 is pending in Parliament. The Bill, when enacted, would allow raising the FDI cap for the industry to 49 per cent.
However, it has been awaiting approval since 2008, as it was delayed by strong opposition from the Left parties.
He said that according to a study, India is going to be one of the top insurance markets in the world and further opening the sector "will be a win-win for both India and the US".
Further, Camunez said that protectionist policies are increasing in India in areas like foreign technology transfer, intellectual property rights and manufacturing. "...these policies are hampering India's domestic competitiveness...," he added.