Strategic Dialogue should set a timeframe for BIT: Inderfurth

India holds great promise as a potential economic partner for the US, says former American diplomat

The India-US Strategic Dialogue scheduled to be held in here next week should set a time frame for the ambitious bilateral investment treaty (BIT) between the two countries, a former top American diplomat said arguing that India holds great promise as a potential economic partner for the US, which is far from realised.

"That 'BIT and beyond' signal also should be sent at the June 13 US-India Strategic Dialogue," Karl Inderfurth, former US Assistant Secretary of State for South Asian Affairs from August 1997 to January 2001 said in an article.

US Secretary of State Hillary Clinton and Indian External Affairs Minister S M Krishna should underscore commitment of the two governments to bolster trade and investment opportunities by  "setting a timeframe to conclude" a BIT.

"They should also indicate an interest in encouraging a more visionary free trade agreement," said Inderfurth, who heads the CSIS Wadhwani Chair in US-India Policy Studies.

Today India, he wrote, has investment agreements with 80 countries including all major European nations, with the 10 member states of the Association of Southeast Asian Nations (ASEAN), and with Japan and South Korea.

The European Union is expected to finalise a free trade agreement with India this year. 

This track record of trade and investment agreements with India puts the US out of step with the rest of the world and puts US investors at considerable disadvantage compared to their foreign competitors, he said.

Even as the volume of US-India trade continues to grow, it is expected to surpass $100 billion for the first time this year, the share of Indian trade that involves the US is dropping, he wrote.

Over the past two years, he said, US investors have had their hopes repeatedly raised about new opportunities in the Indian market, only to see those hopes dashed as a result of stalled economic reforms, inadequate measures to open up foreign direct investment (FDI), and most recently, retroactive decisions on tax laws in the budget.

"A determined effort by the US and India to conclude a BIT could help assuage growing investor uncertainty in India," Inderfurth said.

There is support for BIT on Capitol Hill, he said referring to the letter written by 10 top Senators to the US President, Barack Obama, in this regard early this year.

Indian leaders, he said, agree that the time is right for BIT but suggest the two countries should envision something even more ambitious.