American regulation on foreign investing as a global power is very slim. Businesses often invest into business offshore or simply start a business in another nation like India for their superior talent, cost and quality over the domestic market. Not to mention America’s Treasury for International Affairs has a standing policy to, “support U.S. economic prosperity by strengthening the external environment for U.S. growth.”
Benefits to Foreign Investing
There are, of course points to encourage foreign investing. The largest is the tax loophole for companies doing business outside of the United. This loophole is in the U.S. tax code allows domestic companies to defer taxes on revenue that those companies earn through their overseas subsidiaries. The catch is that the revenue must stay off the company’s US books in order for this loophole to apply. Such a feature can help a company that, if in the highest corporate tax bracket, would pay 35% in taxes on its net income, and instead invest into a foreign market where there will not be as high a tax rate, along with the exemption of American taxes on money not on the books overseas.
Investing in India
The Democratic base of both India and the United States also allows for an open amount of free trade, and continued discussions will only continue to remove any trade barriers between the two nations. At the beginning of the month, President Obama visited for India’s State Department reception for Indian External Affairs Minister Krishna, for both discussions of future trade relations, as well as to promote the American-Indian trade relations. U.S. officials have been frequenting India to try and increase the ease of trade between the two nations on a regular basis.
On a note of reflection, one could make the argument that India, not China will become the Asian superpower of the next few decades. While China shows an amazing rate of growth, business and output, it is still a command economy and has much stricter limits on foreign investment with less sign of change than India. Even as China leans towards a more capitalistic form of rule, without property rights or a change in the ruling body, one could expect to see a shift towards investment in India over China in the years to come.
By – Domenic Gabriella for IndiaExports.com