India has offered to start negotiations with the US on a bilateral investment treaty (BIT) even as it diluted a policy on preferential market access for local venders.
Commerce and industry minister Anand Sharma, who is on a four-day visit to the US, made the offer in a bid to reinvigorate trade ties between the two countries.
''We have said that 'yes, we are ready for it (bilateral investment treaty). We are in favour of a bilateral investment agreement,'' Sharma told reporters in Washington yesterday.
''We clearly recognise that the economic engagement in both trade and investment, though robust, is well below the potential, given the opportunities that a growing economy like India offers and the opportunities that exists in the largest economy of the United States of America,'' he said.
However, no date has yet been set in this regard, he said.
The offer comes in the backdrop of senior US leaders raising the issue of problems US businesses face in investing in India.
While the new wave of reforms seems to have brightened the prospects of US businesses investing in India, the ground realities are much different, senior American leaders have pointed out.
However, a Congressional committee, which in the recent past had been highly critical of India's policies on trade-related issues, has welcomed the country's decision to put on hold the preferential market access, a policy that smacks of protectionism.
India, however, counters the arguments against preferential market access with the US immigration bill that puts restrictions on the flow of Indian professionals to the US.
Sharma said both himself and finance minister Chidambaram have raised India's concerns over the Immigration Bill during their meetings with their counterparts, and also at the India-US CEOs Forum.
Meanwhile, US trade representative Mike Froman and Honeywell Inc chairman and CEO David Cote said India needed to address concerns of American businesses on a host of policy issues.
They also pointed to the low bilateral trade with India, which was way below that with China.
Bilateral trade between India and the US currently stands at about $106 billion, of which services trade has a major share. With services trade in India's favour bilateral trade with the US is more or less balanced, Sharma pointed out.
''As of now, trade in merchandise and services put together is about $106 billion and fairly balanced and it has the potential to multiply at least four-fold,'' the minister said, adding that this could be raised to $500 billion by 2020.
''If we make real effort in five years, we can definitely by 2020 reach there,'' he said.