Calling upon India to rethink trade barriers, tariffs and regulations in order to become a “hub” for innovation and production, U.S. Ambassador Kenneth Juster says that India and the U.S. need to see trade relations as an “important strategic element” of their ties.
“I still think there’s a notion here that you can attract investment and build industry by creating higher tariffs or more regulation, or by directing resources in a certain direction,” Mr. Juster said at a function in the capital to talk about the bilateral relationship.
He made a particular mention of barriers for the technology industry, including a Reserve Bank order telling technology companies to base all their servers in India.
“I worry now with this talk of data localisation. There is a legitimate concern over data privacy, but do not construct these laws in a way that will make it more difficult for India to be a hub for technology companies all over the world,” Mr. Juster warned over the issue that has become one of a growing number of economic differences between New Delhi and Washington over the past few months.
After rounds of intense trade negotiations since June, India agreed this month to put off until late September its plan to hit the U.S. with retaliatory tariffs worth $ 235 million on 29 American products.
The action was in response to the U.S. raising tariffs on steel by 25% and aluminium products by 10%, which India has failed to get a waiver on. The U.S. is also taking a decision on whether to cancel India’s Generalised Systems of Preferences (GSP) status over the tariffs issue.
The U.S. Ambassador’s comments are an indicator that trade issues will be highlighted during next month’s “2+2” ministerial engagement between India and the U.S., though the main purpose of the talks is the inaugural engagement of Defence and Foreign Ministers on both sides.
On visa policy
In an answer to Parliament last month, External Affairs Minister Sushma Swaraj made it clear that she would raise the US’s proposed legislation to cut down H-1B visas during the talks as well. “We are already raising the issue formally at various fora... We will raise it humbly at the 2+2 dialogue on September 6 in New Delhi,” Ms. Swaraj said in the Rajya Sabha, admitting that the government had several “apprehensions” about the U.S. visa policy.
Countering those concerns, Mr. Juster said the problem was that India’s economy was not “open” enough. “There is simply no reason there shouldn’t be more innovation and entrepreneurship taking place in India, rather than having 300,000 Indian entrepreneurs doing their work in the United States,” Mr. Juster told a gathering at the American Centre in Delhi.
“It doesn’t make sense to me, and I ask myself why. And I truly believe it is because the Indian economy needs to open up further to get the full benefits of this innovation and entrepreneurship,” he said, comparing restrictions on the Indian economy unfavourably with those prevalent in smaller countries such as Israel and Estonia.