India limits foreign investment, needs economic reform: Obama

Washington: Noting that India prohibited foreign investment in too many sectors such as retail, US President Barack Obama today cited concerns over deteriorating investment climate there to endorse another "wave" of economic reforms.

Still sounding positive about Indian economy, "which continues to grow at an impressive rate," he said that to some extent, India's slower growth is a reflection of the larger slow down in the global economy.

The US President answered a wide range of questions on the state of the Indian as well as global economy, Indo-Pak ties and American strategy in the Asia-Pacific region during an interview to PTI here.

US President Barack Obama today cited concerns over deteriorating investment climate there to endorse another "wave" of economic reforms. AFP

Obama was careful not to be directly critical of the negative investment climate in India but cited the concerns of the American business community to make his points.

Many in the American business community, "one of the great champions of the US-India partnership", have expressed concerns that the investment climate in India is deteriorating, he said.

"They tell us it is still too hard to invest in India. In too many sectors, such as retail, India limits or prohibits the foreign investment that is necessary to create jobs in both our countries, and which is necessary for India to continue to grow," Obama said.

Refraining from prescribing any solutions for India's economic difficulties, the President said, "it is not the place of the United States to tell other nations, including India, how to chart its economic future. That is for Indians to decide."

Obama noted that "there appears to be a growing consensus in India that the time may be right for another wave of economic reforms to make India more competitive in the global economy."

Obama then went on to add, "and as India makes the difficult reforms that are necessary, it will continue to have a partner in the United States."

"It is important, though, to put this in the context of India's incredible growth and development in recent decades," he said.

The President pointed out that India had lifted tens of millions of people out of poverty to create one of the world's largest middle classes.

"Indian innovation is an engine of the global economy. And even with the recent challenges, the Indian economy continues to grow at an impressive rate. The Indian people have displayed a remarkable capacity to meet India's challenges," he said.

Describing Prime Minister Manmohan Singh as "my friend and partner with whom I have worked closely", Obama said he valued the insights of the Indian leader at various international fora including the recent G20 meeting in Mexico.

He said at the G20 they agreed that one of the best things they could do to get the global economy growing faster was to renew the focus on growth and job creation in their own countries.

"That's my priority in the US. Of course, one of the most effective ways we can create jobs is to continue expanding trade and investment, including between the US and India."

The President said they need to keep strengthening the pillars of the long-term economic vitality and competitiveness, including the education of the people of the two countries, science and technology, and the modern infrastructure that allows them to move goods and services faster.

"We need to keep up the fight against corruption, which stifles innovation and is one of the biggest barriers to job creation and economic growth around the world. These are some of the things we can do together as global partners," he said.

Obama said one of the reasons why he valued the G20 was that it was the only place where leaders of the world's largest economies -- developed and developing -- can come together and address the economic challenges that affected everyone.

Right now, he said, the global economy continued to face a number of challenges. Global growth, including growth in emerging economies like India, has slowed.

The situation in Europe has, of course, been a concern, Obama said. The G20 summit in Mexico was therefore an opportunity for them to hear directly from European leaders on the progress they were making and on their next steps.

The President said, "In our global economy, we can't just have a few leaders of the most advanced economies making decisions that touch the lives of billions of people around the world.

"That's why we made the G20 the leading forum for global economic decision-making, to give developing and emerging nations, like India, a larger voice. It's why we increased the role of India and other emerging economies in international financial institutions. These institutions are stronger because of India's active participation."

Obama said he believed that the European leaders grasp the seriousness of the situation and were committed to holding the Eurozone together with the steps they have taken in the recent weeks.

"All of us have a profound interest in Europe's success and the US will continue to support our European friends as they work through this challenge."

PTI