[Ip-health] Business Standard- US decries India's economic policies ahead of Trade Policy Forum

Shailly Gupta shailly.gupta at geneva.msf.org
Sun Oct 25 21:49:34 PDT 2015


http://www.business-standard.com/article/economy-policy/us-decries-indias-economic-policies-ahead-of-trade-policy-forum-115102300545_1.html <http://www.business-standard.com/article/economy-policy/us-decries-indias-economic-policies-ahead-of-trade-policy-forum-115102300545_1.html>
Continuing with its investigations spanning May 2014-June 2015, a US trade panel under their International Trade Commission has once again lambasted India’s domestic trade and investment policies ahead of the US-India Trade Policy Forum meet on October 28-29.

The investigation was conducted by US International Trade Commission (ITC), a quasi-judicial federal agency giving trade policy advice to the US government, based on a directive by US Senate Finance Committee and Ways and Means Committee.

The report stated that while the Narendra Modi-led government implemented several new trade and investment-related policies ever since coming to power in May 2014, “it is not yet clear whether policies that negatively affect foreign trade and investment are in fact headed towards much-needed reform”.

The report investigated some of the economic policies made by the present government in improving ease of doing business, taxation policies, foreign direct investment (FDI), tariffs and customs procedures, local content requirements, standards and intellectual property rights.

On taxation policies, the report stated this area remained one of the biggest causes for “disappointment” and “long-standing concern” for US businesses.

“India’s tax policies and practices are longstanding concerns for US businesses … Taxes and financial issues are the second-most widespread issue affecting companies with reported problems including high, variable, and non-transparent taxes; unpredictable state-level excise taxes; export taxes; and high and discriminatory entertainment taxes,” it added.

On retrospective taxation, the report stated this continues to “reduce” India’s attractiveness as a credible investment destination. Some of the American industry representatives surveyed in the report have expressed severe disappointment that the present government has not changed the law to eliminate retroactive taxation, which was promulgated by the previous Congress-led government.

Although the US trade panel has lauded some of the steps taken by India to relax its rules pertaining to FDI, it has said there are still “substantial barriers” in some industries through policies such as equity caps and local production or sourcing requirements.

The report also said the new model Bilateral Investment Treaty (BIT) rolled out few months ago was “highly limited in scope”, compared to existing BITs signed by the US, India other countries, and provides less protection to investors. It added the draft BIT will discourage investors in putting money in India.

In a bid to augment foreign capital inflows, the government had relaxed foreign investment limits in crucial sectors such as insurance and defence.

However, the report suggested these measures did not encourage the investors much. In the insurance sector, it stated, there is still no clarity on management terms and voting rights regarding ownership and control.

Similarly in defense, the report stated that the problem lies in foreign companies holding minority stake and not a controlling stake.

These issues are expected to be taken up strongly by the Americans during the US-India Trade Policy Forum that will be held between commerce and industry minister Nirmala Sitharaman and US Trade Representative Michael Froman in Washington. The last meeting of the TPF took place in November 2014.

FLAK FOR ECONOMIC POLICIES

A US trade panel under their International Trade Commission has once again lambasted India’s domestic trade and investment policies ahead of the US-India Trade Policy Forum meet on October 28-29
The report investigated some of the economic policies made by the present government in improving ease of doing business, taxation policies, foreign direct investment (FDI), tariffs and customs procedures, local content requirements, standards and intellectual property rights
Some of the American industry representatives surveyed in the report have expressed severe disappointment that the present government has not changed the law to eliminate retroactive taxation

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Shailly Gupta
MSF Access Campaign
India



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