India’s high tariffs, local sourcing norms could harm investment, says US

Arun S New Delhi | Updated on March 12, 2018 Published on March 26, 2012

India on Monday raised with the US the issue of a 'sharp jump’ in rejection rate of temporary work visas to Indian professionals, while the US sought opening up of India's multi-brand retail trade to foreign direct investment.

The bilateral talks between the US Secretary of Commerce, Mr John Bryson and the Indian Commerce, Industry and Textiles Minister, Mr Anand Sharma, here also saw India taking up the issue of an early conclusion of bilateral Totalisation Agreement (social security pact).

Besides, India invited US' participation in the proposed National Manufacturing and Investment Zones.

Both nations identified ‘sustainable’ manufacturing, infrastructure – especially with smart grids and intelligent transportation systems – as well as hi-technology innovations and research as priority areas for bilateral cooperation.


Earlier in the day, during a luncheon meeting organised by the industry body FICCI, Mr Bryson said India’s “high” tariffs on many products of interest to the US as well as the local sourcing requirements in sectors such as solar energy and IT/electronics (telecom) “makes it harder to invest in India.”

“Barriers still exist to building our economic relationship,” he said and referred to examples of “high tariffs” on capital goods such as power-generating equipment, some medical products, grapes, citrus, and other fruits.

“Also, we are concerned about measures that interfere with US sourcing decisions in areas like IT, electronics and solar energy,” he said.

Mr Bryson said if India is not able to readily access US products or attract strategic investments from US businesses, “our progress together could slow down.”

“In the long-term, this could cause significant harm,” he said, adding that both sides must work to ensure a more level playing field for businesses.

He also wanted India to allow for more international competition by joining the World Trade Organization’s Agreement on Government Procurement. “This agreement has important provisions that support greater openness,” he said.

Referring to India’s plans of spending $1 trillion in building world-class infrastructure in the next 5 years, he said the US is keen on investments in India on building roads, railways, aviation and energy. Mr Bryson also addressed a CII conference on opportunities for Indo-US Partnership in infrastructure sector.

He also sought more direct investments by Indian companies in the US.


During Bryson’s talks with Mr Sharma, New Delhi also took up the issue of the US’ move to hike visa fees for H1B (work permit for temporary workers) and L1 visas (intra-company transferee); and the US state of Ohio's ban on offshore outsourcing of Government business (which ‘affected’ the Indian IT industry).

India also said the US government decision to centralise Blanket L visa at their Chennai Consulate is another area of serious concern to the Indian IT industry. This is because ‘the move has made applicants from the East and North India travel over 2000 km to get US visa making it a logistical nightmare for companies’.

India alleged that some of these ‘restrictive’ moves on visa norms by the US amount to ‘de-facto discrimination against Indian service suppliers’ and are not compatible with WTO norms.

New Delhi is also pitching for an early conclusion of the bilateral Totalisation Agreement because the absence of the pact is burdening the Indian IT sector as they are required to shell out over $1 billion annually to the US Government towards social security, without any benefit or prospect of refund.

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Published on March 26, 2012
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