 "Mukesh Aghi")
US firms are encouraged with some of the reforms undertaken by the Narendra Modi-led government but await their implementation, said Mukesh Aghi, president, US-India Business Council (USIBC). In an interview with Nayanima Basu, he also said non-tariff barriers imposed by India continue to act as a significant hurdle in India-US trade ties. Edited excerpts:
Prime Minister Narendra Modi is embarking on his second visit to the US in the span of a year. What are the expectations of the American industry in terms of deliverables?
USIBC and its member companies are buoyed by several developments that have taken place since PM Modi's first official visit to the US last September and since the historic joint address by PM Modi and President Obama in January this year - raising of insurance FDI cap from 26 per cent to 49 per cent is crucial to long-term growth and prosperity of India.
In a welcome move that signals increased opportunities for tax certainty, the government signed its first rollback advance pricing agreement (APA) on August 3. Besides, the new coal mines policy, the draft IP policy and the recent announcement to embrace a multi-stakeholder approach to internet governance are all steps in the right direction. But the companies are also eager to see that the government faithfully implements these policies at the earliest. Also, the actual translation of these policies needs to be expedited.
The goods and services tax (GST) Bill seems to be in limbo again…
Tax consistency remains a top priority for a majority of USIBC member companies. Tax uncertainty acts as a serious deterrent to deeper investment and impacts all sectors. The council and member companies eagerly await the legislative passage and implementation of a new GST regime. USIBC believes that the GST would increase India's global competitiveness as an investment destination by streamlining domestic supply chains.
US firms still seem to be concerned about retrospective amendments and MAT (minimum alternate tax) despite government's assurance?
The council applauds the finance minister (Arun Jaitley) for forming a committee to review
MAT, and hope for a positive outcome that will reaffirm investor confidence. We have seen recent reports saying that the MAT committee has recommended giving relief to FIIs on MAT prior to the period of April 1 and the government is favourably considering it. USIBC member companies are eagerly watching this development.
What about intellectual property rights (IPR) laws and domestic content requirement (DCR)?
USIBC is encouraged by the ongoing and regular government-to-government dialogues occurring on intellectual property as well as the draft intellectual property policy, but the council's members are carefully watching the new compulsory licence application that was filed a few weeks ago. The fact that India is addressing key investment issues - including the creditworthiness of distribution utilities and other offtakers, domestic content requirements and technological neutrality, bidding processes, land acquisition and permitting, and grid stability - will facilitate participation by American companies and help India achieve its power generation targets.
So, the US pharma industry is still jittery on potential use of compulsory licencing provisions.
There is much work to do in the area of IP and we look forward to working with the government to increase public awareness on the importance of innovation and IP.
Both sides have yet to agree upon signing the bilateral investment treaty (BIT), which the US feels is crucial.
Very early discussions have been taking place between governments now that the Indian model BIT has been released. At present, yawning gaps exist between the kind of "quality" BIT traditionally supported by the US and some of the "legacy" BITs that India has negotiated in the past. Elements, including investor state arbitration, pre-establishment and national treatment, are essential to a strong and successful agreement.
US authorities have once again complained about the non-tariff barriers India imposes on their imports.
It is still very difficult for our companies to import certain products into India. Whether it is import permits, licencing, or other technical barriers to trade, non-tariff remain a significant hurdle to achieving our shared goal of reaching $500 billion in two-way trade.
USIBC has been working with the government to explore ways to minimise and reduce these non-tariff barriers and we look forward to continuing to address these concerns to ensure that goods and services are traded efficiently, quickly and to the benefit of both countries.
