Launch feasibility study for India-US FTA, bilateral trade aim of $500 bln by 2030: CII-USIBC report


NEW DELHI: India and the US should launch a study to determine the feasibility of a trade agreement and the cost-benefit analysis of such a a pact, industry chambers and lobby groups have suggested.

“An FTA (free trade agreement) between India and US would have wide ranging ramifications for the domestic industries, and a clear cost benefit analysis would be needed to gauge its total impact,” said Confederation of Indian Industry (CII) and the US India Business Council (USIBC) in a report on $500 Billion Roadmap for bilateral trade and business.

As per the report, since country specific tariff exclusions or reductions are difficult, the only way to avoid product/sector specific market access skirmishes is by negotiating a broad trade agreement.


“A comprehensive Economic Cooperation Agreement would reduce tariffs (custom/import duties) which could lead to an FTA further down the road,” the two said in the report and emphasised a comprehensive consultation process, involving sustained

dialogue with industry, to examine all facets to “determine the best course of action regarding a formal trade agreement”.

The report has listed out interventions in 13 specific areas which if resolved, will provide a significant thrust to trade between the two countries by turning challenges into opportunities. The interventions range from reinstating Generalized System of Preferences (GSP) benefits by US for India, bringing down import duties on high end motorcycles to 0%, arriving at a consensus on a pricing mechanism for medical devices, modifications in India’s E-Commerce Policy, removing high tariffs on steel & aluminum imports by US, fostering greater cooperation in strengthening partnership in defence and aerospace among others.

The two groups suggested the US to consider granting an exemption to India from the steel and aluminum tariffs and also waivers from its sanctions for importing oil from Iran and Venezuela.

On agricultural issues, the industry groups suggested the two sides to formalise India accepting the US’ requests with regard to the import of apples, alfalfa hay, cherries, and pork products into India.

They said the recent finalization of the export certificate allowing market access for US chicken and turkey has come as a “big win for the US”.

“Some unilateral moves by India could help alleviate a major trade irritant in the bilateral partnership,” they said in the report on the matter of price controls for medical devices.

This issue will need to be taken up in a comprehensive manner with domestic firms and Multi-National Corporations to come to consensus on a pricing mechanism that balances access to healthcare with enabling innovation and competitiveness amongst private sector firms, according to the report.

On the crucial issue of e-commerce and data localisation, they said that India’s e-Commerce policy has “engendered a whole host of issues that impact both domestic and foreign players. These issue include the definition of private versus community data, prohibition on cross-border data sharing, mandate to establish data centers holding sensitive data of Indians within the boundaries of India, informed consent, following due legal process in data sharing with Indian or foreign authorities, domestic versus Indian—product definitions and requirement for e-commerce app/websites to set up legal entities in India.

Stating that cross-border flow of data is a reality and a necessity, they said that India must also bear in mind that such a policy could prompt reciprocal action by US and other countries which may demand that the data for their citizens stay within the confines of their geographical boundaries.

“This could have an enormous deleterious impact on Indian information technology (IT) and business process outsourcing (BPO) companies”, they said and added that these have grown over the past several decades essentially by processing, analyzing and storing sensitive health, financial, insurance etc. information for customers from other countries within India—the U.S. is a major market for such firms and helps generate thousands of jobs in India.

“Both sides must take a long term and comprehensive view on this issue, taking all concerns into account before finalizing any policies that have a bearing on one of the most dynamic, growing and innovative industries in India,” they said in the report.

CII and the USIBC also suggested India to consider instituting a mechanism of automatic approval in case of clearances and No-Objection Certificates as it would help simplify procedural bottlenecks and paperwork in a range of sectors, thus helping with overall ease of doing business metrics.

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