By Arun Kumar

Washington, July 1 (IANS) The United States now plans to target American investment to India's Tier II cities with two US and Indian trade associations hoping to enlist Small and Medium Enterprises (SMEs).

The new initiative by the US-India Business Council (USIBC) and the Confederation of Indian Industry (CII) besides bringing SMEs into India's global value chain would also introduce US companies to opportunities in Tier II and Tier III cities.

"The Growth in Emerging Metropolitan Sectors initiative will support opportunities for trade and investment especially for small and medium-sized businesses," Under Secretary of Commerce for International Trade Francisco Sanchez said at a discussion organised by USIBC here Wednesday.

"It can lead to an India that is more self-reliant and increasingly self-assured and to an America that itself grows and prospers," he said underlining the opportunity for the American private sector to help unlock the energy of the private sector in India's Tier II cities.

By targeting Tier II and Tier III cities in India for American investment, pressures on primary urban centres in India will be alleviated while introducing US investment to new opportunities. "The result will be inclusive growth - for both sides."

There are 3.7 million manufacturers operating in the United States today. So far, only 27 percent of these manufacturers benefit from exports. The goal is to integrate more such American companies into India's global value chain, and vice versa, leveraging the US-India commercial link , already surpassing $40 billion in two-way trade.

"Companies like GE and Citi have been long-term players in India for more than 100 years," USIBC President Ron Somers said. "It is now important to reach out to smaller companies across the United States and help them find their place in the extraordinary opportunity unfolding in India."

Kiran Pasricha, Deputy Director General, CII, noted "The next phase of growth in India-US bilateral economic relations will come from the SME sector. This platform will provide the much needed impetus."

While engaging the SME sector will be vital to generating wealth amongst a new class of entrepreneurs, Indian Ambassador to the US Meera Shankar noted the heavy burden currently borne by India's largest cities, particularly as a young and enthusiastic population continues to migrate to where commercial opportunity is concentrated.