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India Optimistic US Financial Troubles Will Not Harm Economic Progress

American business leaders say the global financial turmoil will make it more difficult for emerging economies like India's to attract foreign investment. However, Indian officials expect the country's economy to escape relatively unscathed. Anjana Pasricha reports from New Delhi, where industry leaders from the two countries met to push for deeper commercial ties.

The chairman of the United States India Business Council, Indra Nooyi, says American industries can play a larger role in several critical areas in India, such as creation of modern infrastructure and boosting agricultural productivity.

India-born Nooyi is chairman and chief executive officer of American cola giant PepsiCo.

Nooyi warns that financial crisis rocking the United States will make it harder to attract investment. She spoke at a meeting of the US-India Business Council in New Delhi.

"We recognize that the competition for capital is fierce - especially at this moment," Nooyi said. "Cash is in short supply and there are many pressing infrastructure needs in the United States, too. But India can attract the investment with the right policies."

American business leaders say the Indian government must create the "right environment" by ensuring that contracts and government levies are not changed after projects get underway.

Indian leaders have been calling for tens of billions of dollars in investment to build roads, ports and power plants, as the country's growing economy grapples with worsening infrastructure bottlenecks.

India's economy is expanding at more than eight percent a year, making it the world's second fastest growing economy.

India's Science and Technology Minister Kapil Sibal told American business leaders that economic growth may lower marginally, but will continue to be strong.

"With the financial meltdown we are already seeing soothsayers of despair suggesting that India's growth rate will not cross seven percent. But even seven percent, in a situation of this nature, is perhaps good enough for us to move forward," Sibal said.

Indian officials have expressed optimism that the country's banks and other financial institutions will be unaffected by the crisis triggered by the collapse of American investment banks

But they admit that the country could see lower investment, in the coming year, as the world grapples with a liquidity crunch. India's stock markets have already been hit as foreign investors have pulled out billions of dollars, since the crisis.