With nuclear deal sealed, USasks India for bold reforms

The call came as the two countries braced for a new era of investment and trade ties capped Monday by US President George W. Bush's signing into law of a landmark bill for Washington to transfer nuclear fuel and technology to India.

Although India in recent years has embraced reforms which have helped fuel the country's current rapid economic growth, "significant challenges" exist,US Under Secretary of Commerce Franklin Lavin said, suggesting key reforms.

He called for the opening of India's retail sector to foreign multi-brand retailers, saying it would allow Indian consumers access to the "best products at the lowest prices" and improve supply chain efficiencies in the world's second most populous nation.

"Despite recent news stories about cracks in the dam on retail access, the fact is that barriers remain," he said, apparently referring to American retailer Wal-Mart's penetration of the Indian retail market through a local partnership.

Lavin, in charge of the US Commerce Department's international trade portfolio, also suggested that India eliminate foreign equity caps in the financial services, banking and insurance sectors.

"Right now, investment caps are very low," he said, citing particularly the 26 percent equity limit in the insurance sector which prohibited foreign firms from participating in the lucrative pensions sector.

Lavin, who just returned after leading the largest US trade mission to India, said that India should realise that long term funding provided by insurance companies could help pay for much-needed infrastructure development.

He also urged India to bring down its "high" tariffs and formulate laws that protect patents and copyrights, and sought joint ventures for open access to foreign broadcasting and cable TV.