Date:15/05/2008 URL: http://www.thehindubusinessline.com/2008/05/15/stories/2008051551451000.htm

Back India to soon emerge as US Ex-Im Bank’s largest client

Free trade agreement with India too premature, says US Ambassador

“FTA to be really effective would also have to include agriculture. That is an area which is really not ready for free trade negotiations yet.”

– Kamal Narang

Largest client: The US Ambassador to India, Mr David Mulford (right) with the Chairman and President, Export Import Bank of the US, Mr James Lambright, addressing a press conference in the Capital on Wednesday.

Our Bureau

New Delhi, May 14 India would soon become the largest market for the Export-Import Bank of the US, overtaking Mexico, Mr James H. Lambright, the visiting Chairman and President of the US Government’s official export credit agency, has predicted.

“Mexico is in our backyard. It is very easy for American companies to ship to Mexico. You can do it on a truck. So, this (emergence of India) says a lot about the attractiveness of the Indian economy with the US companies, who are excited to ship their goods and services to India. It just speaks of how strong the economy is and how attractive it is,” Mr Lambright told newspersons here on Wednesday.

The Export-Import Bank of the US supports the financing of US exports and services to markets around the world. As of now, its outstanding exposure to borrowers in India stood at about $3.5 billion. There is also pipeline of commitment that will add about $6 billion more over the coming years.

The US Ambassador to India, Dr David C. Mulford, pointed out that India’s catching up with Mexico as the largest client was significant as the US did not have a free trade agreement (FTA) with India. “Mexico is a country with which US has FTA, which we do not have with India. Yet, you see business growth (with India) taking place,” Dr Mulford said, adding that India would still have to solve infrastructural problems and create infrastructure solutions.

On whether he expects an India-US FTA to further boost trade ties, Dr Mulford felt that an FTA between the two countries was “too premature” and that it hinged on inclusion of agriculture.

“I think it would (boost trade). FTA to be really effective would also have to include agriculture. That is an area which is really not ready for free trade negotiations yet. You could see some progress in manufacturing or services. But true free trade agreement would have to incorporate agriculture. I think it is too premature. Ultimately, we will find some trade accommodation,” he said.

On Wednesday, the Ex-Im Bank signed agreements with Punjab National Bank ($250 million) and Indian Renewable Energy Development Agency ($50 million) under the India Infrastructure Facility.