U.S. investment in India has already doubled in the past four months (photo: AP)
U.S. President Barack Obama ended his landmark visit to India with a pledge of $4 billion in investments and loans, seeking to release what he called the "untapped potential" of a business partnership between the world's two largest democracies.
His host Prime Minister Narendra Modi said U.S. investment in India had doubled in the past four months and vowed to do more to slash the country's notorious red tape and make it one of the world's easiest places for business.
"We are moving in the right direction ... That said, we also know that the U.S.-India relationship is defined by so much untapped potential," Obama told a forum of CEOs from both countries in New Delhi. "Everyone here will agree, we've got to do better."
India accounts for only 2 percent of U.S. imports and one percent of its exports, Obama said. While annual bilateral trade had reached $100 billion, that is less than a fifth of U.S. trade with China.
Obama said that U.S. Export-Import Bank would finance $1 billion in exports of 'Made-in-America' products. The U.S. Overseas Private Investment Corporation will lend $1 billion to small-and medium-sized enterprises in rural areas of India.
$2 billion will also be committed by the U.S. Trade and Development Agency for renewable energy, the U.S. president said.
This followed the breakthrough announced on Sunday on the civilian nuclear deal that, despite a groundbreaking 2008 pact, had stopped U.S. companies from setting up nuclear reactors in India and had become one of the major irritants in Indo-U.S. ties.
According to Reuters, the United States views India as a vast market and potential counterweight to China's assertiveness in the region, but has been frustrated with the pace of New Delhi's economic reforms.
"There are still too many barriers, hoops to jump through, bureaucratic restrictions that make it hard to start a business, or to export, to import, to close a deal, deliver on a deal," Obama told the Indian and U.S. business leaders.
Nevertheless, Modi has injected a new vitality into the economy since his May election.
In his speech, the prime minister promised a predictable and competitive tax regime for global investors by removing the uncertainties that still persist in India's tax policies, and said that his office would directly monitor all large investment projects.
Obama also announced that the two governments have agreed to resume talks on the proposed bilateral investment treaty.
The president underlined key focus areas for Indo-US businesses that includes further ease of doing business in the US, a new government panel in India to support foreign trade and investments, as well as development of technology by US businesses to aid India’s infrastructure development in railways, roads, broadband and smart cities.
Both countries decided on Tuesday to set up three task forces to jointly develop Visakhapatnam, Ajmer and Allahabad as smart cities.