USA's exports to and investment in India could increase by up to 66% without trade and non-trade barriers, according to a new report commissioned by the House Committee on Ways and Means and the Senate Committee on Finance
Bidhu Bhushan Palo | The Dollar Business
Ahead of President Barack Obama’s visit to India next month and amid hectic consultations on Indo-US trade, the U.S. International Trade Commission (USITC) has released a new report which claims that India’s imports from USA have remained much below potential mainly due to policy barriers in India.
India runs a trade surplus of around $16.6 billion with USA, but this could shrink to a mere $2 billion, if India takes corrective steps, says the USITC in its report “Trade, Investment, and Industrial Policies in India: Effects on the U.S. Economy.”
USITC says that restrictive Indian policies have adversely affected U.S. companies doing business in India so far, and several trade and non-trade barriers have led to as much as 60% of American exporters reducing their shipments to India.
According to USITC, the main policy barriers placed by India include tariffs and customs procedures, foreign direct investment (FDI) restrictions, local-content restrictions, treatment of intellectual property (IP), taxes and financial regulations, regulatory uncertainty, and other nontariff measures, such as unclear legal liability, price controls, and sanitary and phyto-sanitary standards.
Average tariff rates applied to Indian imports of US goods have declined from over 20% during 2000-2004 to below 10% in the years after 2004. However, USTIC says that the share of U.S. companies that were significantly affected by restrictive Indian policies rose from 18.8% to 26.1% between 2007 and 2013.
Source - Ministry of Commerce, India
This article was published on December 23, 2014.
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