U.S. Treasury Secretary John Snow on Tuesday pressed India to further open its banking and insurance industry to foreign investors to build on a decade of high economic growth. Snow praised India's economic changes since its government introduced free-market reforms in the early 1990s, but said more liberalization was needed to support strong growth in the future.
India's economy is growing 7 percent annually, one of the fastest in the world, but many experts fear that a lack of adequate infrastructure could slow progress in coming years. The country needs huge investments in building power plants, roads and ports to keep pace with the demands of a rapidly growing economy.
"These infrastructure issues are at the forefront of India's future. But infrastructure needs to get financed," Snow told reporters after a visit to the National Stock Exchange in Bombay.
Infrastructure projects typically require long-term funding, which are provided by insurance companies and pension funds, other than banks, according to the AP.
"Your growth and rising prosperity is good for you and is good for us too, " Snow said. "U.S. firms have opportunities here and we want to encourage the reform movement."
Although foreign companies are allowed to invest in banking and insurance, their participation is currently limited to holding minority stakes and is subject to several restrictions. Foreign investment in pension funds is banned.
Snow argued that India would benefit if it eased curbs on foreign investment in the financial sector.
"The financial sector is the nerve of any economy. It has so much potential here," he said.
He also sought changes in the Indian judicial system to expedite resolution of business disputes.
Snow didn't give specifics, but legal delays over disputes have in the past discouraged American companies from doing business with India. A dispute over a power plant built by Enron Corp., India's biggest ever foreign direct investment, took more than four years to be resolved.