US attacks 'closed' India economy

US says trade in agriculture 'distorted' with India

The US ambassador in Delhi has said India remains one of the "most closed economies" in the world.

David Mulford urged India to give greater access to its markets and allow foreigners to invest directly in its thriving retail sector.

"The US is one of the world's most open economies and India one of the most closed," he told a trade fair in Delhi.

Mr Mulford was making his first public comments since taking over as ambassador last month.

Despite improving ties in the past few years, the US has often reproached India for not opening up its markets sufficiently to allow more exports into India.

India, in turn, has pressed the US to phase out farm subsidies so that its markets are not flooded by inexpensive farm imports.

India and Brazil joined hands at the World Trade Organisation (WTO) talks in Cancun last year to press the US and European Union to cut back farm subsidies.

'Distorted trade'

Ambassador Mulford said the US had been engaging India in the WTO to "further open international markets and to mitigate trade distortions, particularly in agriculture".

There must be new market openings from developed and developing countries, especially those like India Ambassador Mulford

Mr Mulford gave an example of such a "distortion" in agricultural trade between India and the US.

"In agriculture, India enjoyed a $857m trade surplus with the US in 2003. Meanwhile, it has taken six years for US farm exports to India to double to a still very modest $309m in 2003," he said.

"Clearly, given India's population, growing middle class and robust economic growth, this figure is too small."

Mr Mulford said India's rapidly growing retailing sector would benefit if it allowed foreign direct investment (FDI).

"Changes [in the retail sector] will lead to greater choice at lower prices for the consumers - including offerings of food and beverage products from the US," he said.

"This progress is being hampered by the ban on FDI in the retail sector."