WASHINGTON – A US State Department report on the investment environment in India said that India’s economic policies did not match the claims of Prime Minister Narendra Modi and that the premier had made slow progress fulfilling his election campaign promises from two years ago, the Wall Street Journal reported.

The report, which aims to guide US investors interested in India, noted that the Modi administration had failed to improve the land-acquisition laws or push legislation in Parliament to simplify the taxation system.

“This has resulted in many investors retreating slightly from their once forward-leaning support,” it said while adding, “India is one of the fastest growing countries in the world, but this depressed investor sentiment suggests the approximately 7.5% growth rate may be overstated.”

The report, however, appreciated Prime Minister Narendra Modi for taking several steps which have reshaped the Indian economy as “generally friendly” towards foreign direct investment in fields such as civil aviation, defense, e-commerce and pharmaceuticals.

But still, it said, “many sectors of the economy retain equity limits for foreign capital, which has proven to be a deterrent to investment.”

The State Department report went on to say that India’s economic significance cannot be ignored as the construction of new infrastructure worth $1.5 trillion to $2 trillion is being planned in the country over the next 5-7 years.

“Despite the challenges, the opportunities are immense for foreign companies operating in India, although many highlight that success requires a long-term planning horizon and a state-by-state strategy to adapt to the complexity and diversity of India’s markets,” the report said.