US raises concerns over local content requirement in India

The United States today raised concerns over stipulation for local sourcing in tenders in some sectors in India, saying such a requirement will be counter productive in attracting investment.
As part of its Make in India drive, the government has mandated in some sectors the stipulation of sourcing a certain percentage of goods and services locally.
The US had dragged India to WTO over provision of domestic content requirement in India's solar power programme.
Latest to join the local content list is oil and gas sector where international companies will have to source up to 50 per cent of rigs and pipes, among other things, locally for PSU tenders.

"Local content requirement is something that we have faced in other countries as well... We strongly believe (from) our experience from around the world, (that) local content requirement will be seen like they drive the business (but) end up actually being counter productive in the long term in attracting investment and getting companies to come to the business," US Deputy Secretary of Commerce Bruce H Andrews said.
Andrews, who is leading a delegation of 18 US companies on a Smart Cities Infrastructure Business Development Mission, said the US has spoken about its "concerns" over local content.

"The more open your market is, actually the more you are going to attract investment and more willing the companies are going to come to do business here," he told reporters.

The requirement of sourcing a certain percentage of goods and services from local suppliers will keep "the best and most efficient technology out of the market," he said, adding that opening up to international competition gets the best technology.
Reducing competition by artificial trade impediments does not serve the day and enhance innovations, he added.
Asking about impediments, Andrews said the US and India have "very good relationship" and are "very focused on solving the problems together."
"Clearly there are issues, but the Indian government is involved in very open and frank discussion. That's very important that the governments work together.

"There are issues like streamlining of process and ease of doing businesses and local content requirement. We value dialogue and efforts to work collaboratively to address these issues," he said.
The US, he said, is in discussions with India on building an innovation based ecosystem.
(Reopens DCM 86)
When asked about the hike in visa fees, US Deputy Secretary of Commerce Bruce H Andrews said: "Our Congress recently put an increase in visas which applies across the board. It applies to country visas from all countries."
"I know that it's got a great deal of interest in India, it has a very broad application to countries around the world, and that is something that we recognise has had an impact... and there are number of businesses here are interested in the action that Congress has taken," he added.

Commerce Minister Nirmala Sitharaman has already written to the US Commerce Secretary Penny Pritzker on the visa fee issue, raising India's concerns.
In December, US President Barack Obama had signed into law a USD 1.8 trillion spending package which, among other things, introduces a hefty USD 4,000 fee for certain categories of H-1B visa and USD 4,500 for L1 visa.
Companies having more than 50 employees and more than 50 per cent of their US employees on H-1B and L1 visas would have to pay the new fee when the next visa application session kicks off on April 1.
Terming the hike under the 9/11 Health and Compensation Act as highly discriminatory, IT industry body Nasscom had recently stated the move would have an impact of about USD 400 million annually on India's technology sector.