The visiting United States Congress delegation, which met Commerce and Industry Minister Arun Jaitley on Friday, has sought better enforcement of contract conditions in the event of a breach of contracts.

The demand comes in the background of the failure of the Dabhol power project, which was promoted by US company Enron.

Jaitley told the delegation that the issue of enforcing contracts applied not only to foreign investment, but also to domestic investment, and the issue was being looked into.

He said the proposed New Jersey Bill against outsourcing of government contracts in the infotech sector smacked of protectionism and was tantamount to denial of market access.

He said outsourcing offered numerous economic advantages to US firms, including a reduction in their overhead costs and improvement in their competitiveness. India had emerged as an attractive source of high-quality low-cost back office operations because of its competitiveness in this area, he added.

The delegation accompanied by US ambassador Robert D Blackwill had detailed discussions with Jaitley on furthering bilateral trade and increasing foreign direct investment.

The delegation comprising Joseph Crowley, Sheila Jackson Lee, Kendrick B Meek and Chris Bell favoured promoting partnership between small and medium enterprises of the two countries.

Jaitley said India had been perceived as an attractive investment destination that had one of the most liberal FDI regimes in the world.

The US delegation sought further liberalisation of the investment regime.

On bilateral trade, responding to the concern expressed by US side over the widening trade gap in India's favour, Jaitley said the sustained increase in Indian exports to the US was a reflection of growing competitiveness of Indian goods and services.

For India, United States continued to be the largest export destination accounting for 20 per cent of the total exports. While merchandise exports to the US grew by 26.5 per cent in the first two months of this year as compared to the previous year, the exports in 2002 had grown by 21 per cent.

On the other hand, US exports to India grew by 9.1 per cent in 2002 as compared to 2001 even though its global exports declined by 4.9 per cent.