11-08-2005, 08:38 PM
From Bloomberg
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Snow Says India's Legal System May Be Repelling Investors
Nov. 7 (Bloomberg) -- U.S. Treasury Secretary John Snow, starting a four-day visit to India, said he would talk to political and business leaders about speeding up the legal process as a means to attract more international investment for ports, highways and other infrastructure projects.
India's courts are clogged, presenting a risk to investors who face delays of several years on earning a return on their money if they face a legal challenge, Snow said today in Mumbai after separate meetings with representatives of U.S. financial companies and infrastructure developers.
Snow said he would raise the idea of creating a special dispute-settlement process for infrastructure projects. <b>India lags other big developing countries in attracting foreign investment, attracting $5.5 billion in the 12 months ended March 31, compared with almost $61 billion for China in 2004 and $11.8 billion for Brazil in the first nine months of this year. </b>
``The legal system leaves a bad taste in the mouths of people trying to take on long-term projects because of the uncertainty of legal outcomes and the length of getting any outcome,'' Snow told reporters. A dispute-resolution mechanism ``seems to respond to a clear concern,'' Snow said. ``Justice delayed is justice denied.''
Snow, 66, is set to have dinner with chief executives tonight and visit the stock exchange tomorrow before departing for New Delhi to meet with government officials, including Finance Minister P. Chidambaram on Nov. 9 and Prime Minister Manmohan Singh on Nov. 10.
Treasury Campaign
The trip is part of a Treasury campaign to forge closer economic links with the world's emerging economic powers, and to improve export and investment opportunities for U.S. companies. In August, Snow visited Brazil, South America's largest economy, and last month spent almost two weeks in China, the world's fastest growing major economy.
The Treasury secretary also invited his counterparts from all three countries, along with Russia and South Africa, to a meeting of the Group of Seven industrial countries that he hosted in Washington in September.
<b>China is already the world's seventh-largest economy, with a gross domestic product of about $1.65 trillion. India's $665 billion economy grew at an average annual rate of 6.3 percent in the decade ended March 31, the fastest since independence from the U.K. in 1947. Brazil's economy has grown by almost a third since 1990 to $603 billion. </b>
``Some future administration is going to benefit from this,'' said Philip Swagel, an economist at the Washington-based American Enterprise Institute and former chief of staff at the White House Council of Economic Advisers. ``It is a forward- looking policy to acknowledge that these countries matter, and are going to matter more.''
`Potential Powerhouses'
These large emerging economies have ``the potential to become the powerhouse economies of the 21st century,'' Tim Adams, Treasury's under secretary for international affairs, said in a briefing before leaving Washington. ``India is a stop along the way toward visiting all those countries.''
The issues Snow said he would raise in India mirror the ones he discussed in Brazil and China.
Snow and Adams have spoken favorably of efforts by politicians in all three countries to implement market-based economic policies. At the same time, they have nudged their counterparts to reduce barriers to international investment in industries from highway construction to banks, and to drop import tariffs.
India's tariffs are ``remarkably'' high, especially for farm goods, according to the latest annual assessment of global trade barriers by the U.S. Trade Representative. India's average tariff rate is 22 percent, compared with 12 percent in China.
Trade Deficit
The U.S. trade deficit with India widened to $6.8 billion in the first eight months of the year from $6.4 billion a year ago. U.S. exports to India rose to $5.2 billion from $3.8 billion, while imports from India increased to $12 billion from $10.2 billion.
``India needs to open up,'' said Stephen Roach, chief global economist at Morgan Stanley in New York, who visited the country last month. ``Historically, India has been closed to foreign direct investment. There is a lot of energy in the government being directed at changing this.''
Where India is succeeding is in developing a strong domestic economy, Roach said. India's consumption as a share of its economy is 64 percent, compared with 58 percent in Europe, 55 percent in Japan and 42 percent in China, Roach said in a report Oct. 31.
Snow may find that comforting. He and Adams in recent months have said shrinking the record U.S. trade deficit will require stronger domestic demand from other countries to buy more of the world's exports.
``It is a land of such potential,'' Swagel said. ``Our main interest there is to support them.''
To contact the reporter on this story:
Kevin Carmichael in Mumbai at kcarmichael@bloomberg.net.
Last Updated: November 7, 2005 07:43 ESTÂ
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<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Snow Says India's Legal System May Be Repelling Investors
Nov. 7 (Bloomberg) -- U.S. Treasury Secretary John Snow, starting a four-day visit to India, said he would talk to political and business leaders about speeding up the legal process as a means to attract more international investment for ports, highways and other infrastructure projects.
India's courts are clogged, presenting a risk to investors who face delays of several years on earning a return on their money if they face a legal challenge, Snow said today in Mumbai after separate meetings with representatives of U.S. financial companies and infrastructure developers.
Snow said he would raise the idea of creating a special dispute-settlement process for infrastructure projects. <b>India lags other big developing countries in attracting foreign investment, attracting $5.5 billion in the 12 months ended March 31, compared with almost $61 billion for China in 2004 and $11.8 billion for Brazil in the first nine months of this year. </b>
``The legal system leaves a bad taste in the mouths of people trying to take on long-term projects because of the uncertainty of legal outcomes and the length of getting any outcome,'' Snow told reporters. A dispute-resolution mechanism ``seems to respond to a clear concern,'' Snow said. ``Justice delayed is justice denied.''
Snow, 66, is set to have dinner with chief executives tonight and visit the stock exchange tomorrow before departing for New Delhi to meet with government officials, including Finance Minister P. Chidambaram on Nov. 9 and Prime Minister Manmohan Singh on Nov. 10.
Treasury Campaign
The trip is part of a Treasury campaign to forge closer economic links with the world's emerging economic powers, and to improve export and investment opportunities for U.S. companies. In August, Snow visited Brazil, South America's largest economy, and last month spent almost two weeks in China, the world's fastest growing major economy.
The Treasury secretary also invited his counterparts from all three countries, along with Russia and South Africa, to a meeting of the Group of Seven industrial countries that he hosted in Washington in September.
<b>China is already the world's seventh-largest economy, with a gross domestic product of about $1.65 trillion. India's $665 billion economy grew at an average annual rate of 6.3 percent in the decade ended March 31, the fastest since independence from the U.K. in 1947. Brazil's economy has grown by almost a third since 1990 to $603 billion. </b>
``Some future administration is going to benefit from this,'' said Philip Swagel, an economist at the Washington-based American Enterprise Institute and former chief of staff at the White House Council of Economic Advisers. ``It is a forward- looking policy to acknowledge that these countries matter, and are going to matter more.''
`Potential Powerhouses'
These large emerging economies have ``the potential to become the powerhouse economies of the 21st century,'' Tim Adams, Treasury's under secretary for international affairs, said in a briefing before leaving Washington. ``India is a stop along the way toward visiting all those countries.''
The issues Snow said he would raise in India mirror the ones he discussed in Brazil and China.
Snow and Adams have spoken favorably of efforts by politicians in all three countries to implement market-based economic policies. At the same time, they have nudged their counterparts to reduce barriers to international investment in industries from highway construction to banks, and to drop import tariffs.
India's tariffs are ``remarkably'' high, especially for farm goods, according to the latest annual assessment of global trade barriers by the U.S. Trade Representative. India's average tariff rate is 22 percent, compared with 12 percent in China.
Trade Deficit
The U.S. trade deficit with India widened to $6.8 billion in the first eight months of the year from $6.4 billion a year ago. U.S. exports to India rose to $5.2 billion from $3.8 billion, while imports from India increased to $12 billion from $10.2 billion.
``India needs to open up,'' said Stephen Roach, chief global economist at Morgan Stanley in New York, who visited the country last month. ``Historically, India has been closed to foreign direct investment. There is a lot of energy in the government being directed at changing this.''
Where India is succeeding is in developing a strong domestic economy, Roach said. India's consumption as a share of its economy is 64 percent, compared with 58 percent in Europe, 55 percent in Japan and 42 percent in China, Roach said in a report Oct. 31.
Snow may find that comforting. He and Adams in recent months have said shrinking the record U.S. trade deficit will require stronger domestic demand from other countries to buy more of the world's exports.
``It is a land of such potential,'' Swagel said. ``Our main interest there is to support them.''
To contact the reporter on this story:
Kevin Carmichael in Mumbai at kcarmichael@bloomberg.net.
Last Updated: November 7, 2005 07:43 ESTÂ
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