US industry associations red-flag India's 'restrictive' trade barriers

The Association raised concern over use of strict quality control orders during the pandemic that effectively limited imports of US-designed and manufactured products in various sectors

The US industry associations have raised serious concern over India’s trade restrictive measures with the United States Trade Representative (USTR). Sending their inputs to the USTR for the upcoming National Trade Estimate Report on Foreign Trade Barriers, the American industries, including pharmaceutical, agriculture, dairy, telecommunications, and software, have sought intervention by the US government.

The National Association of Manufacturers (NAM) said although Prime Minister Narendra Modi has taken steps aimed at improving India’s business environment, India’s high tariff rates and restrictive border measures continue to limit manufacturers’ ability to invest in and export to India.

“Despite increases in US exports to India in recent years, manufacturers in the US exported fewer manufactured goods to India ($22.8 billion in 2021) than to countries such as Belgium and Singapore, whose economies are less than one-fifth the size of India’s,” it said.

NAM also raised concern over the use of strict quality control orders during the pandemic that effectively limited imports of US-designed and manufactured products in various sectors, such as toys and footwear.

The Toy Association in its submission said India has become one of the most difficult markets for the US plaything industry. “With a draconian quality control order for toys, a 200 per cent tariff increase on imported toys and a complex waste management system, the Indian government has effectively created a de facto ban on all toy imports,” it said.

The Pharmaceutical Research and Manufacturers of America (PhRMA) said the recently announced National List of Essential Medicines 2022 includes four patented medicines which will be included in Schedule I of the Drug Price Control Order 2013 and subject to price controls like generics.

“PhRMA also remains concerned about the application of the trade margin rationalisation on high value non-scheduled medicines,” it added.

The Computer & Communications Industry Association said there is great concern with the speed at which Indian policymakers and political leaders have increased censorship practices and increased restrictions on companies that fail to take down content political leaders deem ‘objectionable’.

“This has been combined with a dramatic increase in the aggression by which enforcement agencies go after US firms in the market and novel enforcement tactics,” it said.

Quoting the United States International Trade Commission, the association said an estimated $549.4 million was lost in India due to repeated Internet shutdowns affecting Facebook, Instagram, YouTube, and Twitter between 2019 and 2021.

The International Intellectual Property Alliance in its representation claimed the losses due to streaming piracy in India are expected to reach $3.08 billion by 2022, urging India for stricter enforcement of copyright laws.

The Information Technology Industry Council (ITI) said while the new guidelines relating to geospatial data and associated services were ostensibly aimed at opening up India’s mapping policy and improving the ease of doing business through deregulation, they also contain elements that are discriminatory to foreign service providers.

ITI said the definition of “telecommunications services” is extremely broad in the draft India telecommunication Bill (2022), which intends to replace the existing legal framework governing telecommunication in India.

“Expanding the scope of the telecommunications services to include all internet-based communications services, over-the-top communications services, etc could subject these businesses to additional compliance burdens and in many cases to overlapping regulations,” it said.   

ITI said India has the opportunity to showcase progress on some of its more restrictive policies when it hosts the Group of Twenty (G20) in 2023. “We encourage the US government to work with the Government of India to shape policies that can truly be a global model for an open foreign investment environment,” it added.

Raising concerns

• Association of manufacturers says high tariff rates and restrictive border measures limiting the ability to invest in and export to India
• Toy association flags draconian quality control order, 200% tariff rise on imported toys, and a complex waste management system
• Pharma body says it is concerned about application of Trade Margin Rationalization on high value non-scheduled medicines
• Computer & communications industry says there is great concern with increased censorship in India