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USITC hails Indian steps to remove trade barriers

23 Oct '15
3 min read

India has made significant changes to some of its policies that discriminate against US trade and investment since Narendra Modi became Prime Minister on May 26, 2014 according to the US International Trade Commission (USITC) report, Trade and Investment Policies in India, 2014–2015.

The USITC, an independent, nonpartisan, fact finding federal agency, prepared the report at the request of the US House of Representatives Committee on Ways and Means and the US Senate Committee on Finance.

The USITC report describes significant changes to India's trade and investment policies by Modi government since it took office in May 2014. It also describes changes to policies identified in the USITC report, Trade, Investment, and Industrial Policies in India: Effects on the US Economy, which was published in December 2014.

The new USITC report identifies significant policy changes or new policies by the Modi government during May 2014–July 2015 in four areas: foreign direct investment, tariffs and customs procedures, local-content and localization requirements, and standards and technical regulations.

The report highlights that since May 2014 India has raised foreign direct investment (FDI) equity caps in the insurance and defense industries, removed the requirement for pre-investment authorizations in several industries and permitted FDI in certain segments of the railway industry. These changes have helped to improve India's overall investment regime.

It says that India has made a small number changes in its tariffs and customs procedures. It has reduced tariffs on some information, communications, and telecommunications (ICT)-related products, but increased tariff on several telecommunications-related products. Some changes have improved US access to the Indian market.

India has made changes to policies and practices regarding local-content requirements and localization measures. The changes expand or propose to expand several local-content and localization requirements affecting certain ICT, electronics, and defense and civil aerospace products. The changes affect measures that require foreign firms to purchase Indian inputs, conduct a share of business in India, conduct certain business activities in India, or submit to India-specific testing or registration.

The reports says that despite the Modi government expressing a commitment to harmonize India's standards with international standards and to increase engagement with the US on standards, it has created new India-unique mandatory standards and technical requirements that increase costs, delay time to market, and operate to exclude certain US products from the Indian market.

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