Single-brand retail trade: US asks India to relax local sourcing norms

India pushes for greater agri trade, quick conclusion of totalisation pact

India pushed for a greater market access for agricultural export and better institutional mechanisms to improve food export at the India-US Trade Policy Forum (TPF) on Thursday.

The US asked India to consider relaxing local sourcing norms in single-brand retail trade, aimed at helping American companies such as Apple.

The issue was highlighted at a meeting between Commerce and Industry Minister Nirmala Sitharaman and US Trade Representative Michael Froman. India, however, pointed to reforms in foreign direct investment (FDI) norms, which allow relaxation in local sourcing norms in specific cases.

In July, the government had announced relaxation of FDI norms by giving a three-year exemption to foreign players from local sourcing in single-brand retailing and a five-year relaxation for companies providing ‘cutting edge technology’. But companies like technology major Apple had sought a blanket exemption.

Apple has not approached the commerce ministry after the rules were relaxed, Department Of Industrial Policy & Promotion Secretary Ramesh Abhishek said on Thursday. At present, 100 per cent FDI is permitted in single-brand retailing, but it requires 49 per cent permission from the Foreign Investment Promotion Board.

India has pushed for a greater market access for agricultural export as well as institutional mechanisms to improve food export.

Problems faced by Indian exporters of mangoes, Basmati rice and grapes due to unwarranted requirements and restrictions were raised, Sitharaman said.

That country’s Generic Drug User Fee Act (GDUFA) and Food Safety Modernisation Act have created an elaborate system of inspection and high inspection fees, affecting smaller exporters, she added.

Bilateral trade is $109 billion a year. Both sides wish to increase this to $500 billion. Foreign direct investment from the US was $4.2 billion in 2015-16, up from $806 million in 2013-14.

The Government of India’s (GOI’s) concerns on the US totalisation pact were also discussed. GOI says it discriminates against Indian workers in the US, who lose their social security contributions due to discrepancy in the visa and social security regime rules. GOI wants early conclusion of a totalisation agreement to protect the interest of professionals of Indian origin. The US has signed such a pact with several nations, with the aim of avoiding double taxation on income with respect to social security taxes.

The issue of increase in visa fee and reduction in the number of available H1B and L1 visas, proposed by US lawmakers, was also discussed. GOI says it will adversely affect the Indian information technology sector.

“In 2014-15, as much as 69 per cent of all H1B visas and 30 per cent of L1 visas were issued to Indians,” US commerce secretary Penny Pritzker had earlier said.

On Intellectual Property Rights (IPR), GOI has maintained Indian laws comply with World Trade Organization norms. The US has raised concerns over the patents regime, particularly in pharmaceuticals. On trade secrets, the US wants a separate law.

Later in the day, USTR officials are said to have met Finance Minister Arun Jaitley.