Washington, Jun 21: A series of reforms announced by India in particularly increasing Foreign Direct Investment in a number of sectors will provide a fillip to the potential of US-India bilateral trade, a business advocacy group has said.
"The widened scope of FDI norms in defence, civil aviation, broadcasting services, and pharmaceuticals will provide a fillip to the potential of the US-India bilateral trade," US India Business Council (USIBC) President Mukesh Aghi said while referring to a series of Foreign Direct Investment (FDI) reforms by India yesterday.
Close on the heels of Prime Minister Narendra Modi's visit to Washington earlier this month, the notice that India would liberalise FDI in defence, broadcasting services, civil aviation and pharmaceuticals sectors has further buoyed investor sentiment, it said.
Modi's recent visit to the US included major investment announcements by companies such as Amazon and Star India.
"We applaud the liberalisation of FDI to 74 per cent in brownfield investments under the automatic route in the pharmaceutical sector, while also allowing investments beyond 74 per cent and up to 100 per cent through government approval," Aghi said.
Allowing up to 74 per cent through the automatic route will encourage investment to move swiftly into India in this important and growing sector and will further promote and expand healthcare access in India, Aghi said.
The long-awaited National Civil Aviation Policy is expected to promote regional connectivity, boost tourism and stimulate the economy in tier 2-3 cities. India is the fastest growing aviation market with 21 per cent plus growth in the domestic sector in 2015-16, and can become one of the largest aviation markets in the foreseeable future, he added.
"India continues to attract FDIs despite an uncertain global outlook. Major improvements have taken place in India's economy since Prime Minister Modi assumed office," Aghi said.
"These reforms include accelerated infrastructure investment, greater openness to foreign direct investment, less red tape, and a revised bankruptcy code.
"We had stated earlier that USD 45 billion is only a starting point for American companies to invest in India. With these newly announced reforms, FDIs, technology transfers, and jobs are likely to increase substantially," he said.
The Indian government yesterday launched a second wave of FDI reforms allowing 100 per cent inflows in civil aviation and food processing sectors while easing norms in defence and pharmaceuticals, steps apparently aimed at neutralising fallout of Raghuram Rajan's decision to exit RBI.