Opportunities for investments in India remain closed in many sectors, they tell Kerry

Two influential U.S. senators have lamented that even after eight years of the announcement of the landmark civil nuclear agreement, which lifted the U.S. moratorium on nuclear trade with India, New Delhi is yet to provide a workable nuclear liability agreement that will companies to move forward.

In a letter to Secretary of State John Kerry, the co-chairs of the Senate India Caucus, Mark Warner and John Cornyn, said the agreement was arrived to provide U.S. assistance to India’s civilian nuclear energy programme and expand bilateral cooperation in energy.

“Yet, eight years later, the agreement has not been implemented, and we have yet to see India provide a workable nuclear liability agreement that allows nuclear companies to move forward. We need to finish what we started and realise full commercial potential of this important agreement,” the letter states.

On the economic growth and investment in India, Mr. Warner and Mr. Cornyn state: “In order to continue to achieve positive growth rate, we recognise that India needs to provide employment to its citizens, and increased foreign direct investment is crucial to that goal.” However, they said opportunities for U.S. and other foreign companies to invest in India remained closed in many sectors and demanded that caps be lifted, especially in banking and insurance.

“We also remain concerned about Indian government’s legislation that would retroactively allow the authorities to tax foreign companies and their assets, including tax assessments that are levied on tax years that date back several years. These efforts undermine foreign investment and raise questions about the government’s commitment to a transparent and progressive investment climate. This regime creates great uncertainty for businesses considering investing India, and it is imperative that India send a clear signal that foreign businesses do not need to fear arbitrary, retroactive tax charges,” the letter states.

It asked Mr. Kerry to take up these important issues during the U.S.-India Strategic Dialogue and other forums so that the relationship continues to be strengthened in many important areas, including expanded defence ties and important regional cooperation on Afghanistan.

On the energy front, the senators have pushed for enhancing cooperation, especially with the potential for U.S. exports of LNG and investments in renewable energy efficiency.

“The U.S. and India should also build upon the 2010 agreement to collaborate on energy technology, and for its part, India should ensure that U.S. energy companies are able to openly compete for contract in India without domestic subsidies,” the letter says.