US hints at lifting India sanctions

Sanctions were imposed in 1998 after India conducted nuclear tests

The United States has given a strong indication that economic sanctions imposed on India will be lifted.

A senior American official, Christina Rocca, said the sanctions were being reviewed and her government was keen to see India take a leading role in ensuring stability in the region.

Rocca criticised India's 'protectionism'

However Ms Rocca, the Assistant Secretary of State on South Asian Affairs, took India to task for what she called its protectionist trade policies, its investment climate and its failure to provide an effective system for the protection of intellectual property.

She said the United States was India's largest trading partner, but the volume of bilateral trade remained low.

Key role

In a sweeping and generally positive assessment of bilateral ties, Ms Rocca said India had a key role and responsibility in helping secure "stable peaceful conditions" in South Asia and beyond.

"In this connection, I hardly need to tell you, a review on our sanctions policy is now underway," she said.

"And we will need to work closely with Congress to see how the current situation might be changed. Getting beyond sanctions would do much to deepen the bilateral relationship," she added.

Non-proliferation

The US imposed sanctions against India following its series of underground nuclear blasts in 1998.

"Non-proliferation remains an important goal of US policy," Ms Rocca said.

We want to expand and transform our engagement on defence issues, talking more about potential areas of co-operation while continuing to narrow our differences

Christina Rocca

"But we want to expand and transform our engagement on defence issues, talking more about potential areas of co-operation while continuing to narrow our differences."

Her visit here came just one week after the landmark Indo-Pakistan summit in Agra, which she praised as an important beginning despite both sides' failure to seal the talks with a joint declaration.

Ms Rocca has held a series of meetings in New Delhi with Indian leaders, including Foreign Minister Jaswant Singh and national security advisor Brajesh Mishra.

Damaging conflict

On the economic front, Ms Rocca's stance on the state of Indo-US relations was combative, criticising the level of "protectionism" in India.

Ms Rocca particularly highlighted a damaging payments dispute between the western Indian state of Maharashtra and a $2.9bn power project involving US energy giant Enron.

The survival of the project - the single largest US investment in India - has been threatened by Maharashtra's refusal to pay what it considers extortionate tariffs charged by the power station.

"The ongoing dispute... casts a dark cloud over India's investment climate," Ms Rocca said.

"It will be difficult for international investors to view India favourably until it is resolved."