AFTI Comments on Indian Trade Barriers for NTE Report

In a continued effort to strengthen the U.S.-India trade relationship, this week AFTI submitted comments to the Office of the United States Trade Representative (USTR) for the 2015 National Trade Estimate Report on Foreign Trade Barriers (NTE) detailing the impact certain discriminatory trade practices in India are having on the global economy. Discriminatory tariffs, failure to protect IP rights, and the forced transfer of technology to Indian firms all serve as significant barriers to a mutually beneficial trade environment between the U.S. and India.

While AFTI members continue to be encouraged by the election of Prime Minister Narendra Modi and his declaration that India is “open for business,” it is time for real evidence of India’s renewed commitment to incentivizing investment and growth. Despite the announcement of the formation of an annual high-level Intellectual Property Working Group., there has yet to be any concrete steps taken by the Indian government in regard to IP protections. Furthermore the new Indian government has so far blocked a WTO global trade facilitation agreement, raised tariffs, and imposed new burdensome requirements on ICT products from the U.S. and other countries.

AFTI is committed to implementing reforms that benefit not only U.S. businesses, but improve India’s economy through increased foreign direct investment. As highlighted in the submitted comment, below are some areas of concern for business sectors in both countries:

India’s copyright problem is daunting.

“Piracy of movies, music and illegal downloads in India is estimated to have cost the music and entertainment industry approximately $4 billion dollars per year, the bulk of which affects local content…”

“Due to the high rate of piracy, lacking IPR protections, and poor enforcement, industry groups in India and abroad remain inhibited from innovating new products and investing more in India.”

India’s telecoms sector is dropping due to protectionist policies.

“Through limiting foreign investment, creating multiple local content requirements for related equipment, and providing a difficult and confusing tax regime for imported products, India uses many tools in its arsenal to prop up domestic industry at the expense of foreign companies…”

“This volatile and onerous environment has clearly affected foreign direct investment (“FDI”) in the telecommunications sector. According to a report published by the Indian government on FDI equity into the Indian market, the telecoms sector has experienced a precipitous drop over the course of only a few years.”

India has a long and troubled history with regard to discriminatory patent policies.

“For U.S. industry, two of the most damaging of these are India’s approach to compulsory licensing and its narrow standards for patentability… These policies, and the uncertainty that they have created for foreign industry, have had a clearly detrimental impact on investment decisions, most acutely in the biopharmaceutical sector…”

“In enacting onerous and WTO non-compliant standards for patentability, Indian authorities appear to have intentionally created an additional hurdle for protection of foreign biopharmaceuticals and chemicals, with the aim of benefitting India’s domestic industries.”

For more information, view AFTI’s full NTE comment.