(Fils) registered with SEBI, 212 are from the U.S. An
investment of about $5.6 billion out of the total
$11.4 billion by the Fils in the Indian capital markets
has been made by these companies. This accounts
for about 49% of the total investments made by Fils
since 1993.

Investment by U.S. based Fils in India

Mus. Faas 1 aee Ter Live Pitea [ss

U.S. companies in India are involved in every sector
that is open to private investment. From infrastruc-
ture to consumer goods and from information tech-
nology to consultancy services American companies
are represented in India. During President Clinton’s
recent visit to India, memoranda of understanding
(MOUs) worth about $3.5 billion were signed by,
among others, Motorola, Hughes Network Systems,
Bank of America, IBM, Enron and Ogden Energy.

Economic reforms in India:

The Government of India has renewed its commit-
ment to expand the reform process in order to gen-
erate and sustain higher economic growth. In the
past eleven months, a number of new initiatives
have been taken. These include:

© The passage of the Insurance Bill opening India’s
insurance sector to private investors and setting
up the Insurance Regulatory and Development
Authority (IRDA);

¢ Replacing the Foreign Exchange Regulation Act
(FERA) with a more investor friendly Foreign Ex-
change Management Act (FEMA);

© The passage of the new Information Technology
(IT) Bill;

© Creation of special economic zones to boost ex-
ports and removal of quantitative restrictions on
714 additional items.

Several trade-related legislations have also been
passed such as the Trade Marks Bill, Geographical
Indications of Goods (Registration & Protection) Bill,
and the Copyright (Amendment) Bill, in order to
meet WTO requirements. Norms for Foreign Direct

Investments have been further liberalized and pro-
cedures streamlined. India has now moved to a sys-
tem where most investment proposals are approved
automatically.

Prospects for further
India-U.S. economic cooperation:

There are several areas where economic coopera-
tion between India and the U.S. can progress fur-
ther. These include IT, telecom, energy and other
knowledge industries such as pharmaceuticals and
bio-technology.

The IT sector is India’s fastest growing sector with
over 50% average annual growth since 1991. The
turn over of the sector has increased from $2 billion
in 1994-95 to $8.7 billion in 1999-2000. Today,
nearly two in five of the Fortune 500 companies
outsource their software requirements to India. As a
consequence, there has been remarkable growth in
India’s software exports too, from $485 million in
1994-95 to $4 billion today. The share of North
America (U.S. & Canada) in India’s software exports
is about 62%. During 1999-2000, U.S. investment in
the computer industry in India accounted for over
50 % of the total FDI inflow received by this sector.

Abundant investment opportunities exist for further
strengthening India-U.S. economic ties in IT, espe-
cially, in areas like communication infrastructure,
optic fiber cable, gateways, satellite-based commu-
nication wireless, IT-enabled services, IT enabled
education, data centers and server farms, and soft-
ware development.

Pharmaceuticals, biotechnology and chemical indus-
tries also provide great opportunities for closer co-
operation. The Finance Minister of India, Mr. Yash-
want Sinha stated during his recent visit to USA that
one of the most important areas where there is a
tremendous synergy between Indian and American
enterprises are knowledge based projects and ser-
vices where both the countries have competitive
advantage as exporters. This is substantiated by the
fact that India is one of the largest manufacturers
and exporters of pharmaceuticals. It has a rich genetic
pool and a large family structure ideal for studying
diseases. It also holds the key for Genotype Drug
Design and is widely acclaimed for its large pool of
trained doctors and cost effective research & devel-
opment (R&D) activities.

See INDIA-U.S. ECONOMIC RELATIONS, Page &

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