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India Made Significant Changes to Some Trade and Investment Barriers During May 2014 – July 2015, Says USITC

October 22, 2015
News Release 15-100
Inv. No. 332-550
Contact: Peg O'Laughlin, 202-205-1819
India Made Significant Changes to Some Trade and Investment Barriers During May 2014 – July 2015, Says USITC

India has made significant changes to some of its policies that discriminate against U.S. trade and investment since Narendra Modi became Prime Minister on May 26, 2014 according to the U.S. International Trade Commission (USITC) report, Trade and Investment Policies in India, 2014–2015.

The USITC, an independent, nonpartisan, factfinding federal agency, prepared the report at the request of the U.S. House of Representatives Committee on Ways and Means and the U.S. Senate Committee on Finance.

As requested, the USITC report describes significant changes to India’s trade and investment policies by the government of Narendra Modi since it took office in May 2014. It also describes changes to policies identified in the USITC report, Trade, Investment, and Industrial Policies in India: Effects on the U.S. Economy, which was published in December 2014.

The new USITC report identifies significant policy changes or new policies by the Modi government during May 2014–July 2015 in four areas: foreign direct investment, tariffs and customs procedures, local-content and localization requirements, and standards and technical regulations. Highlights follow.

  • Since May 2014 India has raised foreign direct investment (FDI) equity caps in the insurance and defense industries, removed the requirement for pre-investment authorizations in several industries and permitted FDI in certain segments of the railway industry.  These changes have helped to improve India’s overall investment regime. [Read More]
  • India has made a small number changes in its tariffs and customs procedures.  It has reduced tariffs on some information, communications, and telecommunications (ICT)-related products, but increased tariff on several telecommunications-related products. Some changes have improved U.S. access to the Indian market. [Read More]
  • India has made changes to policies and practices regarding local-content requirements and localization measures.  The changes expand or propose to expand several local-content and localization requirements affecting certain ICT, electronics, and defense and civil aerospace products.  The changes affect measures that require foreign firms to purchase Indian inputs, conduct a share of business in India, conduct certain business activities in India, or submit to India-specific testing or registration. [Read More]
  • The Modi government has expressed a commitment to harmonize India’s standards with international standards and to increase engagement with the United States on standards. Nevertheless, U.S. industry and government representatives report that the Modi government has created new India-unique mandatory standards and technical requirements that increase costs, delay time to market, and operate to exclude certain U.S. products from the Indian market.
  • Six case studies highlight the effects of specific policies in selected industries of concern to U.S. companies.  Four case studies examine the impact of India-unique standards and technical requirements concerning agricultural products, food products, alcoholic beverages, and cosmetics and personal care products.  Two case studies examine developments in India’s healthcare sector concerning medical devices and clinical trials. [Read More]
  • The Modi government introduced no new IPR laws during May 2014–June 2015 to address barriers to the protection of trade secrets, regulatory test data, patents, trademarks, and copyrights.  Nevertheless, U.S. industry and government representatives noted the willingness of Modi government officials to engage in discussions with the United States on IPR issues. [Read More]
  • The Modi government also pursued several broad policy changes to enhance India’s business climate during May 2014–July 2015.  Changes in the following areas particularly may positively affect India’s trade and investment climate: improving India’s economic infrastructure, improving the ease of doing business, creating greater bureaucratic transparency and accountability, changing taxation policy, and encouraging state-level policy changes in India. [Read More]

Trade and Investment Policies in India, 2014–2015 (Investigation No. 332-550, USITC Publication 4566, September 2015) is available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub4566.pdf.

USITC general factfinding investigations cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the USITC’s objective findings and independent analyses on the subject investigated. The USITC makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

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