U.S. Wants India To Eliminate Trade Barriers, Expects New Government To Address Issues

The U.S. wants India to eliminate trade barriers for American firms and remove data localisation restrictions, while expecting that the new government will address these issues, said visiting U.S. Commerce Secretary Wilbur Ross.

“Our goal is to eliminate barriers to the U.S. companies operating here, including data localisation restrictions that actually weakens data security and increases the cost of doing business,” he said.

Ross was speaking at the Trade Winds Forum and Trade Mission. He is leading a delegation of over hundred American businesses in India.

“We applaud India's commitment to addressing some of these barriers once the government is reformed probably in the month of June,” he said in his speech.

Ross also alleged that India imposes very high import duties on goods like automobiles, motorcycles, agri-products and alcoholic beverages.

“These include both tariff and non-tariff barriers, as well as multiple practices and regulations that disadvantage foreign companies.”

He said that India's average applied tariffs rate is 13.8 percent and remains the “highest” of any major world economy, “the very highest”.

Citing examples, he said, there is a 60 percent tariff on auto, while the U.S. has 2.5 percent.

India has 50 percent import duty on motorcycles and 150 percent on alcoholic beverages, Ross said. “These are just a few extreme examples.”

India imposes bound tariff rates —maximum import duty India can charge under global trade rules of World Trade Organisation— on agricultural products at the average of an “incredible” 113.5 percent and some are as high as 300 percent, he said, adding that “they are way too high”.

“We are working diligently with the Indian government and our private sector partners to address market access issues through the U.S.-India commercial dialogue and through the recently re-convened U.S. India-CEO forum,” Ross said.

Major obstacles being faced by the U.S. companies include price controls on medical devices and restrictive tariff and inspections on electronics and telecommunications products. He noted that duties on routers, switches and parts of cellular phones are as high as 20 percent.

In stark contrast, he said, the duty on these products imported by the U.S. from India is zero.

“Zero versus 20 percent. That’s not a justified imbalance. These high tariffs undermine India's goal of improving digital access and literacy,” Ross added.

He expects that the new government will look at these matters.

“In the World Bank's Ease of Doing Business report, India climbed an impressive 23 spots this year but it still ranks 77 out of 190 countries. So, there is lots of room for further improvement,” he said.

He also mentioned that India is the U.S.’ thirteenth largest export market due to “overly restrictive” market access barriers.

Referring to trade imbalance with India, the commerce secretary said the U.S. accounts for 20 percent of India’s total exports.

Last year, the bilateral trade between the two countries stood at $142 billion, up by about $16 billion from 2017.

“In the services sector also, U.S. has a trade deficit with India,” he said, adding last year it was $3 billion.

“This is specially unusual. We generally have services surplus with most countries. But in the case of India, the deficit is largely due to IT services,” he said.

Ross also said that as India is pursuing a range of development priorities, including revitalisation of urban infrastructure, “we are confident that U.S. technology and expertise can play an important role in serving India's critical development needs”.

Talking about investments, Ross said according to their numbers for 2017, India’s foreign direct investment into the U.S. totaled $13.1 billion, but the country’s FDI into India was more than $44 billion.

Speaking at the event, U.S. Ambassador to India Kenneth Juster said that Secretary Ross met Prime Minister Narendra Modi in the morning in which he raised all these issues “very clearly and the government understands our position”.

“India is one of the worlds fastest growing economies and despite the fact that there are certainly tariff and non-tariff barriers to trade, the Indian markets still present significant opportunities for U.S. exports,” Juster said.

He added that the U.S. and India along with other like minded countries share a vision for South Asia and the Indo-Pacific of a free, open and rules based region, which respects the sovereignty, territorial integrity of all countries.

“We want to guarantee the freedom of navigation, of over flight and the commerce,” he added.

The seven-phase general elections in India will complete on May 19 and the counting of votes will take place on May 23.