Weeks before Prime Minister Narendra Modi’s visit to Washington, the US government has said it will not allow formal participation of the American industry in the government-to-government dialogue with India as far as trade and investment issues are concerned.

India and the US have two main dialogue mechanisms –—Trade Policy Forum (TPF) and Strategic and Commercial Dialogue (S&CD) — to discuss and resolve all outstanding economic issues. But, the American industry lobbies believe that both these forums have so far been ineffective in removing some of the hurdles they face in doing business with India.

As a result, they had been pressurising the Obama administration to make them a party in the two dialogues, sources told BusinessLine .

However, as talks of Modi’s visit to the US started gaining momentum, the private sector in the US upped its ante. As many as 14 members of the US House Ways & Means Committee wrote to US Trade Representative Michael Froman and Commerce Secretary Penny Pritzker asking for a formal role in TPF and S&CD, which has now been denied, sources said.

“Private sector involvement could be particularly useful to advance IPR issues as part of the TPF discussions. With direct private sector involvement and input, the S&CD and TPF can perhaps better serve to generate substantive improvements in India's business climate, on IPR and other areas of concern,” the letter written by House Ways & Means Committee members to the US government said.

Interestingly, the American private sector plays a substantial role in similar dialogues between the US and China. Hence, it wanted the same treatment in dealing with India.

Critical of IP laws

The US investors and business had been severely critical of India’s intellectual property laws and patents regime, especially in the field of pharmaceuticals. They have also been vociferous against the country’s taxation regime, with a special focus on retrospective tax and transfer pricing issues.

The US has been also pushing hard for concluding the Bilateral Investment Treaty (BIT) that will ensure adequate protection to American investors keen to bring in big-ticket investments here.

“These dialogues (TPF and S&CD) are important channels to resolve outstanding commercial issues, but must move beyond rhetoric to capture concrete deliverables,” said Jay Timmons, President, National Association of Manufacturers (NAM), in a letter to the US government on May 2.

On the other hand, the Indian industry representatives, under the aegis of the Confederation of India Industry (CII), have established a Track-II dialogue with the American industry lobbies to discuss all business and industry policy related matters.

Recently, Commerce and Industry Minister Nirmala Sitharaman told the Rajya Sabha that India is contemplating filing as many as 16 disputes against the US at the World Trade Organisation (WTO).

In February, India lost the two-year solar dispute case against the US. It had complained that India had violated global trading norms by insisting on domestic content requirement.

Modi will meet US President Barack Obama on June 7 in Washington.

Related Topics
comment COMMENT NOW