US commerce head expects economic reforms with PM Modi's 'strong, decisive mandate'
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Congratulating Indian Prime Minister Narendra Modi on his "strong and decisive mandate", US Commerce Secretary Wilbur Ross said that Washington looked forward to working with him "to address our mutual trade opportunities, and investment potential".
Speaking at the India Ideas Summit of the US-India Business Council (USIBC) in Washington on Thursday, he said: "I hope that now that he has received a strong re-election mandate, he will carry through on the reforms he and I discussed. Even more important than specific items is the mindset of moving toward a more open economy."
Ross mounted a strong defence of American trade policies and said: "We will continue to work diligently with the Indian government and our private-sector partners to eliminate barriers to US products."
Investments were not a one-way street. He said that India's Foreign Direct Investment (FDI) in India totaled $13.1 billion at the end of 2017.
He said that a recent investment summit in the US, 97 Indian executives made up the fourth-largest delegation of the 78 countries attending it.
In contrast to Secretary of State Mike Pompeo's more conciliatory and forward-looking speech at the summit on Wednesday, Ross was more forthright as he listed US trade grievances against India.
"The US is India's largest export destination; while India, with a population of 1.35 billion people, is only our 13th largest export market... This imbalance is due — importantly — to overly restrictive market access barriers.
"India's average applied tariff rate of 13.8 per cent remains the highest of any major world economy. It has a 60 per cent tariff on automobiles, and 150 per cent on alcoholic beverages. On motorcycles, it is 50 per cent while ours is just 2.4 per cent. Its bound tariff rates on agricultural products average 113.5 per cent, and are as high as 300 per cent," Ross said.
He contrasted it with the US, which, he said "has zero tariffs on 61 per cent of the total value of our imports, encompassing more than 17,000 categories of products. On thousands of additional products, our tariffs are lower than what other countries impose".
"High tariffs, non-tariff barriers, and unfair trade practices by our global partners have cost our nation entire industries, good-paying jobs, and lost innovation," he said. "These protectionist practices also breed companies in places like India that have not become globally competitive, and, therefore, hurt local economies."
He mentioned in general terms the restrictions on Walmart-owned Flipkart and Amazon, the requirement that credit card companies store data locally, price controls on medicines and tariffs on information communications technology products as both tariff and non-tariff barriers faced by US companies.
"These barriers, some of which are new, impede the development of viable commercial relationships," he said.
Defending President Donald Trump's administration to strip the General Scheme of Preferences (GSP) away from India, Ross said that during a visit to New Delhi in May, he told Modi that Washington "would hold off on its GSP decision until after the election, so that it would not interfere with them" but concerns over tariffs "needed to be addressed in order to avoid a possible negative decision".
"They were not addressed and, therefore, because India has not assured the US that it will provide equitable and reasonable access to its market, President Trump terminated India's GSP designation," Ross said.
He also alluded to the original intent of the GSP, which was to help underdeveloped countries and contrasted the India of 1975 when it received the GSP status and now.
When then-President Richard Nixon extended the GSP to India, "no one at that time could have predicted that in four decades India would become the world's third largest economy with a GDP growth rate projected to reach 7.3 per cent this year. Nor could anyone have foreseen that by 2018 bilateral trade between our countries would total $142 billion, and that the US would not only have a goods deficit with India of $21 billion, but also have a services deficit of $3 billion".
"This is a real imbalance," he added.
Ross recalled that earlier as the founder of W.L. Ross & Co, a private equities fund, he made several major investments in India and "even owned an Indian airline, SpiceJet".
"That experience has helped inform my understanding of the challenges US companies face in the Indian market."
But he added that India was making progress in becoming business friendly and cited the World Bank's Ease of Doing Business report where "India climbed an impressive 23 spots this year, to rank 77 out of 190 countries".
He pinned his hopes on state government efforts to attract investments.
"Many US companies find it advantageous to take the approach of working through their states to establish partnerships and identify customers in India.
"For this reason, we are eager to advance our cooperation with US and Indian states to open trade and investment opportunities for businesses in both countries," Ross added.
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