New Delhi: The US has expressed concern over India’s efforts to renegotiate its existing investment treaties with countries and has urged it to relax stringent local sourcing norms in single-brand retail that has prevented the Cupertino, California-based Apple Inc. from opening its own branded stores in India.
“The US encouraged India to consider relaxing local sourcing requirements in single brand retail trade. India mentioned recent FDI (foreign direct investment) reforms providing relaxation in local sourcing norms in specific cases,” a joint statement issued by the US and India after the bilateral trade policy forum meeting in New Delhi said.
India, after initially allowing “state of the art” and “cutting edge” technology companies such as Apple to set up exclusive stores without local sourcing norms, changed its mind and asked such firms to comply with the 30% local sourcing norm like any other company.
These norms have to be met within a period of three years of the opening of the first store.
Delivering a lecture at the University of Chicago Centre, US Trade Representative Michael Froman said liberalizing the retail, financial services and professional services sectors would help create an open, non-discriminatory and predictable regime that enhances the development of markets and the quality of life of the Indian people.
Froman said India’s efforts to renegotiate and weaken existing agreements is concerning, “particularly at a time when other emerging markets, such as China and Vietnam, are working to attract investment by negotiating higher-standard agreements”.
India has prepared a model Bilateral Investment Treaty and plans to renegotiate the existing Bilateral Investment Promotion and Protection Agreement with 72 countries to keep domestic tax laws out of the ambit of such agreements. India and the US have not signed any investment treaty with each other.
“India’s relatively high tariffs and continued requests for exemptions from global trade rules—the need for which has already been questioned by the ministry of finance – only slows India’s full participation into the global economy and the benefits that come with that for hundreds of millions of Indian citizens,” Froman said.
On e-commerce, Froman argued for keeping the digital marketplace open and free. “The United States and India have strong mutual interests in this regard and could together lead the world in promulgating new trade rules that benefit innovators—rules that prohibit customs duties and discrimination for digital products, ensure the free flow of data and combat localization requirements, and protect both the consumer and the integrity of the Internet,” he added.
At the trade policy forum meeting, both countries pressed each other for greater market access in agricultural commodities. While India asked for greater market access and simplification of procedures for mangoes, grapes and rice, the US asked for easier market access for cherries, boric acid and alfalfa straw.
“We asked for greater institutional mechanism and a system-based approach for food safety clearances wherein there is mutual recognition of conformity assessment processes. We want something which is in line with international practices such as Codex guidelines,” commerce minister Nirmala Sitharaman told a press conference after the meeting.
Froman did not attend the press briefing and gave a separate talk at the University of Chicago Centre in New Delhi.
Sitharaman raised the issue of totalization agreement and identified this as a major non-tariff measure which restricts the movement of information technology professionals. “We clearly urged the US to engage in negotiations to sign a totalization agreement,” she said.
India also sought cooperation on the trade facilitation in services agreement that it has proposed at the World Trade Organization. Sitharaman said the US recognized India’s proposal and did not sound averse to the idea.