1. Editorial: Dealing with USITC concerns

Editorial: Dealing with USITC concerns

Many of them have been flagged by Indian firms also

By: | Updated: December 29, 2014 3:33 AM

Given India’s stance on patenting is quite different from that of the US, and given how the US has all manner of restrictions on goods and services of interest to India, it is easy to dismiss the US International Trade Commission’s (USITC) report on India’s trade, investment and industrial policies. Indeed, some have argued that India needs to have its own USITC-style report on US restrictions, published annually, to balance the scales. That may well be a good negotiating tactic, but it is important to realise, on the eve of President Obama’s visit as a guest at India’s Republic Day ceremony, that many of the issues raised by the USITC are those raised by both Indian industry as well as the government itself. To that extent, acknowledging them will cement long-term relations between the two countries. If, in the bargain, as the USITC says, US exports to India increase by two-thirds, and investments double, that is icing on the cake.

There are specific US issues on patents, on duty levels on agricultural products including wines, on automobile tariffs, on local content rules for the solar industry that cannot be addressed without corresponding reciprocity by the US in areas of Indian interest, but it is important to be realistic—do high import duties on US farm exports, including a 200% duty in Maharashtra, really help Indian consumers? Equally, a look at the very first table in the USITC report makes it clear the larger problems are not that difficult to solve. Nearly 18% of US firms engaged with India reported ‘tariffs and customs procedures’ as a big hurdle. Even if you leave aside the issue of tariff rates, surely it doesn’t benefit India to have customs procedures that make it rank 88th out of 148 countries on this score? On customs, even if you ignore specific US items of interest, it is problematic if, as the USITC points out, a 10% import tariff translates into 29% once additional duties are added. Given how areas with lower import duties have generally become more efficient, high-duty regimes hurt India’s overall competitiveness and the make-in-India programme. USITC is also right in pointing out that inverted duty structures prevent US firms from manufacturing electronic items here. Taxes and financial regulations are listed by 16.3% of US firms as the next biggest hurdle. Is that something India doesn’t agree with?

India’s patent policies are different from what US pharma firms want, but the industry ministry itself is trying to dissuade Nexavar-style compulsory licences in the future, something the USITC is agitated about. Indian innovator firms have complained, like the USITC, of problematic clinical trial procedures, and data exclusivity is worth considering for India; unacceptably high levels of counterfeiting, similarly, affect both Indian firms and customers, and also lower government revenues. Apart from addressing these issues, India needs to woo larger US firms who really steer government opinion. Getting Boeing and Lockheed Martin to produce defence equipment in India, which is what the Indian government is doing right now, will go a long way in ensuring the next USITC report is more favourable, as will going easier on GM trials or coming up with less opaque rules for e-commerce firms like Amazon. Since all of this will also help India, it is difficult to understand why the government is not actively engaging with the USITC.

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