Snow to urge larger foreign role in India

Snow to urge larger foreign role in India

Glenn Somerville, Reuters/Mumbai

U.S. Treasury Secretary John Snow will be aiming to nudge India ahead on reforms, including greater scope for foreign ownership in financial services, as he begins a four-day visit on Monday.

Snow's trip, which takes him from Mumbai, the financial center of Asia's third-largest economy, to the capital New Delhi, extends a series of visits to countries the U.S. Treasury sees as having a vital role in shaping the global economy in the future.

India, with its thriving service sector that is already drawing U.S. jobs away through outsourcing that takes advantage of its educated, cheaper labor force, is seen as a regional leader with considerable influence in advancing the drive towards free trade.

"India is a stop along the way toward visiting all those countries -- including China and Brazil which we visited earlier -- that we regard as having the potential to become the major economies of the 21st century," Treasury Under Secretary for International Affairs Tim Adams said ahead of the visit.

Adams said in September, before finance ministers from the Group of Seven industrial nations met in Washington, that some of the key emerging powers like Brazil, Russia, India, China and South Africa should be "on a glide path" to full G7 membership in recognition of their rising economic might.

The five, known informally as the BRICS based upon their initials, met the finance ministers from the United States, Britain, Canada, France, Germany, Italy and Japan for lunch at the Washington meetings but had no formal role.

India's US$700-billion economy has been growing at a rate of more than 6 percent on average over the past five years.

But the government estimates that about 260 million people -- more than a quarter of the population -- lives in poverty, without safe drinking water, proper sanitation facilities or two square meals a day.

One of its pressing needs, which U.S. officials argue can be countered through more private-sector investment, is for huge spending on infrastructure to improve its roads, ports, airports and electricity-generating capacity.

Last week, the Indian government approved setting up a state- run firm to fund such projects, something short of the private- enterprise solutions the Bush administration would favor.

Snow is to meet representatives of U.S. financial firms doing business in India as well as Indian businessmen, and in New Delhi he is expected to meet Finance Minister Palaniappan Chidambaram and Prime Minister Manmohan Singh.

A measure of the growing importance the Bush administration places on its strategic relationship with India came in July, while Singh was visiting Washington, when President George W. Bush made an agreement to permit U.S.-India nuclear cooperation.

That move, which has drawn criticism in the U.S. Congress and elsewhere, followed 25 years during which the United States led a fight to deny India access to nuclear technology because it had developed nuclear weapons and tested them.

The United States is hoping that India will use its influence within Asia and the G20 grouping of developing nations to try to bring scheduled trade talks in Hong Kong between the 148 members of the World Trade Organization to a successful conclusion.

Differences over farm subsidies -- a specially sensitive issue for China since 60 percent of its people derive their incomes from farming -- are already roiling negotiations.