India must lift FDI cap in defence, insurance: US

Drumming up business for the US was clearly part of the agenda of assistant secretary of state for South and Central Asia Robert Blake during his visit to India. The Obama administration wants India to lift the cap on foreign investment in both defence and insurance sectors, he said in New Delhi on Thursday.

"One thing that I think the Indian government could do is to lift the cap on foreign equity in Indian defence firms from 26 per cent to 49 per cent," Blake told reporters at a conference.

Blake said there will be an announcement about sort of a new framework in trade after the US-India summit in Delhi next week. 

"This (trade) is an area where we have been working very hard and made a lot of progress over the last several years. There is a lot of ongoing work that we just need to continue," he said. 

"For example American companies are very interested in seeing investment caps lifted in the insurance sector, in the defence sector, in several others - in banking, in retail. And all of those would provide significant new opportunities to further expand our trade and investment," Blake said. 

Washington is clearly eyeing India's proposed big defence purchases, notably the $10 billion multi-role combat aircraft contract that New Delhi is preparing to put out, for which top American and European aviation companies are locked in fierce competition.