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India needs to have a more transparent and consultative process in policy making, especially in areas such as e-commerce, data protection and price controls on medical devices, if it wants to attract more investors, according to Mukesh Aghi, President and CEO, US-India Strategic Partnership Forum (USISPF).
USISPF is a Washington based not-for-profit institution focussing on strengthening partnership between India and the US. The Biden administration’s disinterest in working on a Free Trade Agreement with India at the moment is not an issue at all as even without such a pact trade between both countries is growing, Aghi told BusinessLine .
On the non-tariff barriers to business from the Indian side, Aghi said that the focus has to be on creating a level playing field for foreign investors and having a transparent and consultative process in policy making. “You have to look at some of the policies being defined in the e-commerce area, on the data side, or, for instance, at price controls on medical devices. Yes, there are political interests in India as there are mass markets…At the same time if you want companies to come and invest, they would want to be part of the (policy making) process,” he said.
Also read: India needs $100 billion FDI annually to become $5 trillion economy: Aghi
“If there is a consultative process, it takes the surprise out of policy making,” he said.
The Biden government’s decision to postpone retaliation against India for imposing digital service tax of two per cent on non-resident e-commerce operators, sent out a positive message, according to Aghi. “It shows that the US does not want to get into confrontation on this issue (of digital services tax). Hopefully by end of six months they will find a solution and sort it out,” he said
‘Consumer interest’
On the tightening of rules for e-commerce companies in India, Aghi said that the rules, should look at the interest of the consumer.
As a representative of the USISPF, Aghi said that he will be discussing transparency issues with leaders during his on-going visit. “Our objective is to bring as much investment into India as possible and we are targetting $100 billion. When all these things (transparency issues) come up, it makes it difficult for us to reach out to the investor community,” he said. US investments into India increased by 19 per cent in the January-July 2021 period despite the pandemic, and the momentum needs to be maintained.
“As we can see, India is still attractive (destination). It provides ‘China plus one’ strategy to companies to diversify their supply chain. It can do much better with transparency at policy level,” he said.
On Commerce & Industry Minister Piyush Goyal’s recent comment that the Biden government was not too interested in an FTA with India at the moment, the USISPF chief said bilateral trade was growing nonetheless. “Yes, a trade deal will expedite the momentum. But without it, business is still growing. It is a non-issue,” he said. The US was India’s second largest trade partner in 2020-21 accounting for $51.4 billion of exports and $28.9 billion of imports.
Aghi added that things might appear to be moving slow on the trade front under the Biden regime, but it was only because it gave greater prominence to addressing health issues, employment generation, and dealing with China that was not willing to follow global rules. “But when the focus turns on trade, you will see a lot of movement happening between India and the US,” he said.
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