'U.S. FDI In India Could Double In Liberalised Regime'

"These reforms are a great first step, and will help India meet the needs and aspirations of its burgeoning population, set to be the world's largest by 2025," she said.

"We want to do what we can, working together, to help integrate India more into globalized goods, services, and investment markets. That's the way to boost job growth in India and ensure already competitive Indian companies become even more competitive," Novelli said.

The U.S. diplomat said since it came into power, the Modi government has taken several steps to boost growth and increase U.S.-India trade and investment.

Two weeks ago, the government announced its first foreign trade policy, which aims to nearly double India's exports of goods and services to USD 900 billion by 2020.

And the new budget released a couple months ago focuses on infrastructure investment and tax simplification.

"We've heard from our private sector that these are key areas for business. For one, the budget set a target of April 2016 for the government to introduce a harmonised goods and services tax, which could add as much as 2 per cent to India's GDP," she noted.

Restrictive investment policies often arise from concerns that domestic companies are unable to compete with foreign ones.

Yet Indian companies are world class and strong, and do not need government protection from outside competition, she argued.

READ MORE: Many New Accounts In India; Many Dormant Ones Too: World Bank
RBI Website Refurbished For Easy Usage, Increased Outreach