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Foreign investment hinges on resolution of Dabhol dispute: Blackwill

United States on Monday cautioned that the dispute over Enron-promoted Dabhol Power Company, if not resolved soon, may result in India being deprived of big international investment.

"Dabhol dispute feeds a chronic perception among the overseas investing community that India may not be ready for big time international investment", US Ambassador to India R D Blackwill said.

The perception in the US is that sanctity of the Dabhol contract may now be in doubt here, "a concern that can spell death to potential investments" in India, he added.

"Long-term repercussions of the case can be profound and sooner the Dabhol matter is put behind us, the better", Blackwill said delivering the keynote address at a meeting organised by the American Chamber of Commerce in India and Indo-American Chamber of Commerce.

Blackwill said US investment in India had less than halved from $737 million in 1997 to $336 million in 2000. US firms were investing only 38 per cent of what was approved by the Indian government.

Most of the investments were not required to be approved by the government in the first place while it took a 3,456 man-days to get a final clearance for foreign investment.

This equalled 10 years of effort from a single person and a 100 additional clearances were required for power projects.

In spite of extraordinary advances in political, military and intelligence ties the country was lagging behind in economic relations, he said.

"I am seriously worried about our systemic economic relationship which is largely stagnant," he said adding bilateral trade levels particularly US exports to India were disappointing.

India's exports to the United States have steadily expanded to $10.7 billion in 2000 from 5.7 billion in 1995.

But US trade flows to India since 1995 have stagnated at around $3.7 billion during the same period.

At 30 per cent, India's average tariff was among the highest in the world, non-tariff barriers like onerous labeling requirements and laboratory testing stunted trade and in some cases, tariff rates on primary and intermediate products are the same or higher than the duties on the finished product.

Imports of 131 commodities had to comply with Indian quality standards, which was a less than productive government intervention.

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