India has asked the US to hold negotiations for a totalisation agreement to exempt the information technology industry from mandatory payments for social security of their Indian employees in the US.
Briefing reporters after the annual trade policy forum (TPF) meeting with US trade representative Michael Froman, commerce and industry minister Nirmala Sitharaman said on Thursday: “We very clearly identified this as one of the non-tariff measures. We have strongly urged the US to engage in negotiations for signing of a totalisation agreement. It is being heard and I hope there will be a positive response from their side,” she said.
The IT companies are paying around $1 billion a year to comply with social security norms for their Indian employees in the US despite the fact that they don’t function there long enough to be eligible for such benefits.
On visa issues, the minister said: “They heard us on this and I hope they will come back to us on this.”
India is already gearing up to challenge the US at the dispute settlement body of the World Trade Organization (WTO). The US decision to drastically hike the H-1B and L-1 visa charges late last year is estimated to quadruple the Indian IT industry’s annual visa costs to $400 million.
‘Told US we issued compulsory licence only once’
India has told the visiting US delegation that it has issued only one compulsory licence (CL), and that too after following a proper and extensive process, Sitharaman said.
“We also reminded (the US) that a German court has granted a CL to a US company,” she said. “They should be aware that many countries are invoking the CL provisions and India issued only once. So there (should be) no sense of suspicion or worry,” she added.
Using CL provisions — which are invoked to make an expensive patented drugs available at a cheaper rate usually in the case of public health emergency — a government allows a company other than the patent owner to make the patented product without the patent owner’s permission.
In 2014, India issued the CL to NATCO for anti-cancer drug Sorafenib Tosylate (Bayer had the patent for it), which was criticised by multi-national pharma companies.
India has consistently maintained that its IPR policies are fully compliant with the WTO standards. Nevertheless, the US has retained India on its priority watch list in its annual Special 301 report.
Sitharaman said she drew the attention of the US delegation to a UN report, which vindicated India’s position on IP related issues. “It (The report) also raises issues as how countries will and should have to make full use of the policy space available to them in a TRIPS-compliant manner,” she added.
‘New US laws hurting Indian SMEs’
Sitharaman said certain new rules brought up by the US administration, particularly in food and pharma
sectors, have raised the costs for Indian small and medium enterprises (SMEs). For instance, the Generic Drug User Fee Act and Food Safety Modernization Act of 2011 have given rise to an elaborate system of inspections and accompanying inspection fees.
India seeks greater market access for farm items
The minister discussed issues about greater market access for Indian farm items, especially grapes, mangoes and rice, and pharma products. The country is trying to get the US to recognise more irradiation centres so that mangoes from even the northern Indian can be exported to that country. Currently, the US has recognised only two irradiation centres —Vashi and Bengaluru.
Mechanism to engage US companies proposed
Speaking on the occasion, Department of Industrial Policy and Promotion secretary Ramesh Abhishek said India has offered the US to have a mechanism “with their chamber of commerce on regular engagement with their companies who are in India to address their problems that they may have with various departments, regulators or states”.
India has already put in place similar mechanism for Japan and Germany.
Foreign direct investments from the US to India jumped from $806 million in 2013-14 to $1.8 billion in 2014-15 and $4.2 billion in the last fiscal.