USTR Report Echoes AFTI Concerns on India’s Discriminatory Trade Barriers

On behalf of the many diverse industries we represent, AFTI welcomes USTR’s continued efforts to identify and eliminate trade barriers with India. The recently released 2015 National Trade Estimate Report on Foreign Trade Barriers (NTE) provides further evidence of new and existing discriminatory trade barriers and weak intellectual property (IP) protections in India that discourage investment and innovation. This latest report only reinforces our position that trade policy reforms are a necessary step to encourage a stronger and improved U.S. commercial relationship with India.

As also detailed in comments AFTI submitted to the USTR in October, along with the comments of many AFTI members such as the National Association of Manufacturers, the Motion Picture Association of America and the Telecommunications Industry Association, the NTE report outlines difficulties a wide array of U.S. exporters and investors face in doing business in India. These include high tariffs, burdensome domestic testing requirements, complex import restrictions characterized by a lack of transparency, discriminatory forced local content requirements, and weak protection and enforcement of intellectual property rights (IPR).

As highlighted in the USTR’s NTE report, below are just a few examples of how India’s trade barriers negatively impact U.S. businesses and harm India’s own economic development:

India’s domestic testing requirements deter foreign investors.

  • “[T]he ICT industry faces significant delays in product registration due to lack of government testing capacity, a cumbersome registration process, and tens of millions of dollars in additional compliance costs, which includes factory level as well as component level testing. Accordingly, enforcing these requirements could result in hundreds of millions of dollars’ worth of U.S. exports being locked out of the Indian market, causing great concern for U.S. companies.
  • “U.S. companies have incurred significant expenses due to testing samples being destroyed during the safety testing process in Indian laboratories… Moreover, exporters are forced to leave their products in these laboratories for extended and undefined periods of time.”

Complex tariff barriers impede imports into India.

  • “India’s tariff regime is also characterized by pronounced disparities between bound rates… Given this large disparity between bound and applied rates, S. exporters face tremendous uncertainty because India has considerable flexibility to change tariff rates at any time.”
  • “As part of the 2014-2015 Union Budget, the government of India issued Customs Notification 11/2014. This notification increased tariffs from 0 percent to 10 percent on four broad categories of telecommunications equipment and technologies.”

Weak IP rights threaten innovation, economic growth and job creation.

  • “Although there has been some recent progress with respect to certain IPR enforcement, there have also been a number of IPR developments that have raised concern from stakeholders, including the prior grant of one compulsory license by the government of India as well as revocations and other challenges to patents, particularly patents for pharmaceutical products.”
  • “Furthermore, in April 2013, the Indian Supreme Court stated that India’s Patent Law creates a second tier of requirements for select technologies, like pharmaceuticals, an interpretation that may have the effect of limiting the patentability of a wide array of potentially beneficial innovations.”
  • “India has yet to undertake substantive amendments to its IPR legal regime that would lead to improvements in its IPR environment. The United States remains concerned that measures such as compulsory licensing, patent revocation, and non-transparent and unpredictable price controls may create an atmosphere of uncertainty for IPR owners and disincentivize new and additional investment from foreign rights holders in India.”