Soon after the Narendra Modi-led NDA government took charge, the US government’s International Trade Commission (USITC) launched a study to track the significant changes Modi’s team could bring to India’s trade and investment policies. On December 22, the USITC report, which includes a description of all the policies of the Modi government through the end of September, was released. If the statistics in the report are correct, the share of US companies hampered by restrictive Indian policies has risen from 18.8 per cent to 26.1 per cent between 2007 and 2013. It also points out that the policies in two areas — tariffs and customs procedures, and taxes and financial regulations — have the heaviest effects on US companies, although issues such as intellectual property (IP) weigh high on specific sectors like pharmaceuticals.
The report contains seven case studies highlighting the effects of policies on select US firms or industries. This includes the adverse effects of certain duties on the wine and spirits industry and of recent patent decisions on the pharmaceutical industry. It focuses on the need to find strategies to combat piracy in the content and media sector and hurdles in tapping into the government procurement market. Policy curbs on e-commerce, medical devices, clinical trials etc, are covered.
The report states that in an ideal situation, where tariff and investment restrictions (posed by India) are eliminated and standards of IP protection made comparable to the US and Western European levels, US exports to India would rise by two-thirds, and US investment in India roughly double.
In short, the USITC report, prepared on the basis of the perception of US companies operating in India, projects the dream policy space within which US companies would love to operate in India. How much of this is practical from the Indian perspective is a matter of debate. But one can be fairly certain that the report provides a clear picture of the economic and policy agenda the US would love to see India pursue.
In a sense, the report gives sufficient background material for policy makers before the meeting between US President Barak Obama and Prime Minister Modi when the former visits India on January 26. The report mentions that the study, ‘Trade, Investment, and Industrial Policies in India: Effects on the US Economy’ is not the last one; the panel will provide an update on Indian policy changes in a separate report in September 2015.
It’s virtually the US scorecard on India’s economic policies.
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