U.S. asks India to remove duties, ‘barriers’ on ICT items

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The U.S. has asked India to eliminate customs duties on Information and Communications Technology (ICT) items, a top official said.

“We are asking India to eliminate customs duties on ICT products,” said Ambassador Robert Holleyman, Deputy US Trade Representative. He was speaking at an event organised by the Observer Research Foundation, a think tank.

The demand comes ahead of the bilateral Strategic and Commercial Dialogue slated for next month.

The U.S. also urged India to do away with the requirement that ICT products — including those imported — must be “tested” at Bureau of Indian Standards (BIS)-approved labs and later obtain a registration number from the BIS before they can be sold in India.

Trade pact

Ambassador Holleyman said the U.S. was also working with India on the implementation of the World Trade Organisation’s Trade Facilitation Agreement (TFA) on goods “to ensure free flow of ICT products.” The TFA on goods aims to ease customs norms to expedite the flow of global merchandise trade.

Ambassador Holleyman said another ICT issue the U.S. “cares most about” was India’s order on Compulsory Registration (CR) of ICT products.

Though the ICT products, including those from the U.S., conform to all the international norms, he said under CR, they must be re-tested at Indian laboratories (BIS-approved). “We are encouraging India to eliminate these requirements,” he said.

Improving potential

The U.S.-India ‘Strategic and Commercial Dialogue’ is a forum to discuss bilateral issues with an aim to boost economic growth, generate jobs and improve the investment climate in both countries. Ambassador Holleyman suggested that India should capitalise on an export-led growth strategy as it can improve the country’s potential in the ICT sector.

He said though India’s domestic market is worth about $65 billion it is still small compared to the global ICT market worth $2 trillion.

IPR regime

The deputy U.S. trade representative said the country was encouraged by the focus that India has been giving to develop a stronger Intellectual Property Rights (IPR) regime adding that IPR was a critical component of every innovation-based economy. “We are working with India to establish stronger regime in copyrights and trade secrets,” he said. He said the U.S. wants to work with India to eliminate localisation policies – including norms that require companies to store their data in a particular country (in this case India) — because many of the major IT industry firms have established R&D initiatives in India and they would like to have free flow of data across borders.

India’s concerns

In his address, Shyam Saran, chairman Research and Information System for Developing Countries, said though the U.S. had highlighted many issues regarding the ICT sector, India also had on several occasions voiced its concerns over trade “barriers” including the Obama administration’s move to hike the fee for H1B and L1 visas (work visas used by skilled professionals) as it had hit Indian IT firms.

He said all these issues should not be seen in isolation but as part of a larger package. On the mandatory “testing” at BIS-approved labs, the former foreign secretary said it was needed due to reasons, including security-related issues.

Pointing out that the U.S. also had “localisation” requirements for bank-related data, he said these norms — including localisation policies in some countries that require ICT companies to store their data in their territory — might have been imposed on “perfectly legitimate grounds” including those of privacy and security. He said instead of “nitpicking on trade barriers,” both the countries should work together for better outcomes especially at a time of slowdown in global growth, increasing protectionism and a popular backlash against globalisation.