India's financial services sector offers huge opportunities to US companies and both the nations must increase cooperation in areas, including, infrastructure financing, insurance, pension and corporate bond market, a Ficci report said on Tuesday.
A robust insurance and pension sector plays an important role in India's economic development as it is the source for channelising domestic savings into capital markets, it added. The Indian insurance industry is estimated to achieve a market size of around USD 350-400 billion by 2020.
Also the investment corpus in India's pension sector is estimated to cross USD 1 trillion by 2025, it said.
"Recent developments which make the insurance and pensions sector in India even more attractive for US companies include hike in the FDI cap to 49 per cent, expanding growth opportunities and forward looking regulatory changes," the report added.
A growing middle class, expanding working age population and rising disposable income level are some of the factors that are likely to drive the future demand for insurance products in India.
"The government has also proposed to adopt an open architecture for distribution of insurance products through corporate agents," the report said. India and the US can collaborate in developing a robust regulatory framework by engaging the regulatory bodies of the two countries, which is central banks, insurance, pensions and securities regulators, it added.
"In cooperation with each other, India and the US can consider setting up an International Institute for Regulatory Development which could work in the areas of skill development, knowledge sharing and research on complex financial products," it said.
It added that the US has a well-functioning corporate bond market and its experience can come in handy as India takes steps for developing its market. Further it said in the recent past, India is now increasingly integrated with the global economy and it has a growing role in Asia.
All these factors make the rupee a natural candidate for being considered for greater internationalisation and support from the US will be critical to ensure internationalisation of rupee.
It also said that keeping in view the high financing requirements of these projects, there is scope for India and US to collaborate and develop an understanding about innovative models for financing such projects in India.
The other sectors in which both the sides can enhance cooperation include aerospace, agriculture, defence, education, energy, homeland security and IPR.
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