US industry hopeful of FDI relaxation in insurance

The US industry is hopeful that India would soon announce measures for further liberalisation of foreign direct investment (FDI) norms, especially in the insurance sector, although the Union Budget presented last week was silent on the matter despite expectations.

“I would hope for some more liberalisation in FDI norms and caps, including insurance. People were hopeful that some steps may be there in the Budget. Even if it was not, we might see a policy (on FDI) soon as the government doesn’t reserve everything for a Budget rollout,” said Nisha Biswal, President, the US India Business Council (USIBC), in an interview with BusinessLine .

The USIBC, a Washington-based advocacy body that promotes trade and investment between India and the US, is unhappy with the government’s move to increase import duties on more items, like furniture, footwear and medical equipment.

The US is India’s largest export destination, accounting for $52.42 billion in 2018-19, while imports from the country were worth $35.5 billion, making it the second largest source of imports after China.

“A number of people are concerned about India’s return to the tariff architecture. For a government that is trying to encourage Make in India, this may seem one way of doing that. We are not necessarily supportive of higher tariffs. We think we should be looking at reducing or abolishing tariff instead of increasing it,” she said.

An eco-system for Make in India or Assemble in India could be created by strengthening the supply chain eco-system in the country, she said. “We want to work with the government on exploring how Indian States can become more competitive and draw more investments in supply chains,” she said.

‘Mini-package possible’

On whether a trade pact between India and the US could be concluded soon, Biswal said that while it may be difficult to have a comprehensive agreement that addresses all issues raised by both sides, a mini-package was definitely possible.

“There are a lot of issues that both sides have talked about. I don’t think all of that will get resolved. But I think they will be able to put something together,” she said. In fact, if the visit of US President Donald Trump and the US Trade Representative to India indeed happens, it could be an action-forcing event, Biswal added.

The USIBC is fully supportive of India’s demand for full restoration of the Generalised System of Preferences (GSP) benefits that allowed duty-free access to a large number of imports from India; it was withdrawn last year.

“We feel the GSP is an important tool that not only gives benefits to the beneficiary country, in this case India, but also to consumers and to companies that are making in and exporting from India, which includes a number of American companies,” she said.

The US government, on the other hand, wants a deal in the area of price caps for medical devices and more market access for agricultural produce.

“The fact that both sides are keen to find an outcome is a good sign. It means that we are invested in each other. We look forward to something coming out of these discussions that are ongoing for the last few months,” Biswal said.

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