India is setting up a steeplechase of barriers for American IT and high-tech firms by putting in place random new regulations and policies, representatives of US IT sector have told lawmakers.
“In spite of the opportunities that exist and the impact, the positive impact that open markets have had on the ground in India, the Government of India seems to be doing a stutter-step on open markets and setting up a steeplechase of barriers to the success of foreign companies, especially American entities,” Dean Garfield, President and CEO of the Information Technology Industry Council, said yesterday.
Testifying before a Congressional Committee, Garfield said examples are wide-ranging, from random new regulations to new testing and certification regimes to have access to the market at all.
India is one of the partners and participants in the Information Technology Agreement (ITA) that was signed in 1996, but the world has changed tremendously since 1996, he added.
“None of us are carrying around mobile devices that we held back then, and yet and still, India seems resistant to updating that agreement and moving forward with a new ITA,” Garfield said.
He said the most problematic of these is the preferential market access regime that’s now in place in India, which essentially boils down to if it’s not manufactured in India, then it cannot be merchandised there, which has the potential to foreclose that market to foreign players, including the US.
“As a result, over the last few years, we’ve started to see a decline in foreign direct investment in India and is leading a lot of companies to question their ability to fully access the market, particularly since it’s not just limited to government procurement, but includes private sector arrangements and deals between private entities,” he said.
“India has suggested that the concern there is really focused on information security and protecting the security of the country, which we can empathise with, but the security of their products is not related to where it’s made, it’s related to how it’s made and there are reasonable ways for addressing those security concerns that I think industry is well-prepared to address,” Garfield said.
Though these issues are important for US relationship with India, they are, in fact, quite significant because of the potential contagion effect, he said.