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'US cos face barriers in India's services sector'

June 24, 2011 12:27 IST

Asserting that US companies face strong barriers in the services sector in India, a top Obama Administration trade official on Thursday expressed concern over the trend toward compulsory local production in its 17th largest trading partner.

"In services, US companies face strong barriers, or even bans, in areas such as financial services, education, and legal services," the Undersecretary of Commerce for International Trade Francisco Sanchez said in a business round table, Addressing Challenges, Boosting Ties, organised by the US India Business Council.

"While these barriers and bans hinder companies and firms and institutions in these fields from being as active in India as they would like, the effect is actually much broader and deeper: so many services sector activities comprise the virtual infrastructure that facilitates both the conduct of business and the expansion of the trained workforce that will enable the Indian economy to maintain its fast-paced growth," Sanchez said.

"In manufacturing, we are troubled by a trend toward mandating local production in areas such as solar power plant equipment and IT and telecom hardware," he said.

"We know that India wants to expand its manufacturing base, but we think that incentives,

rather than mandates, would be more successful in attracting the manufacturing investment and technology that India seeks," Sanchez said.

"These are challenges that, with a lot of hard work, can be overcome. We want to work with India to expand commercial opportunities and make India the "best bet" for US companies looking abroad to trade and invest. This is a win-win just waiting to blossom and together, we can succeed," the top trade official said.

Sanchez said America's significantly growing trade and investment with India is a priority for the US President and it's also a priority for him under the National Export Initiative.

"Over the decade that recently ended, India rose from being our 31st-largest export market in 2000 to our 17th largest market in 2010, but it trails such countries as Australia, Taiwan, and Korea," he said, adding that is why the administration is trying even harder to engage holistically with India's government and business community - in a variety of sectors, throughout the country at different levels of government, and with new private-sector partners.

"We want to show that Indian and American companies - and our two countries - can all benefit from increased trade and investment. Our recent and upcoming trade missions have brought US companies to India to pursue opportunities in several priority sectors," he said.

Lalit K Jha in Washington
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