American businesses will not make major moves into India’s market despite its growing middle class unless India reforms three key policy areas.
American businesses will not make major moves into India’s market despite its growing middle class unless India reforms three key policy areas to improve trade relations with the US, according to a former US trade official.
Charlene Barshefsky, who was President Bill Clinton’s second-term trade representative, outlined what the two countries need to do to strengthen their economic ties at a US think tank discussion ahead of Prime Minister Manmohan Singh meeting with President Barack Obama on Sep 27.
According to Politico, an influential political news site, three areas of reform she identified were an economic slowdown that has diminished the value of India’s currency; a set of “vexing regulations and a very challenging rules system” that businesses struggle to navigate; and market access barriers that include tariffs, “buy local” requirements and lax intellectual property protections.
Additionally, the US must back off immigration reform proposals that could make it more difficult for Indian tech companies to send their workers here, she said.
“This is a relationship that should be much stronger than it is. It’s a relationship that should be healthier than it is. It’s a relationship that should be contributing more to both economies than it is,” Barshefsky was quoted as saying at the Centre for Strategic and International Studies.
“Both sides ought to do two things: Reaffirm the commonalities between the two countries, and put the economic relationship on a far more positive and accelerated trajectory,” said Barshefsky, who helped negotiate China’s entrance to the World Trade Organization.
Barshefsky, according to Politico, said the Indian government blocks foreign investment in audio-visual services, banking and financial services, insurance, telecommunications and more by capping foreign equity in companies in those industries.
The Indian government’s decision to decline or revoke drug patents for cancer, glaucoma and other pharmaceuticals from companies including Pfizer and Roche – decisions aimed at providing its citizens with cheaper drugs – “call into question India’s commitment to intellectual property rights,” she said.
Another problematic barrier exists in India’s multibrand retail sector, said Diane Farrell, the executive vice president of the US-India Business Council.
“Multibrand retail is emblematic of some of the deep frustrations and concerns of those who have great enthusiasm and high expectations of the strength of the relationship,” she was quoted as saying by Politico.
Addressing the string of barriers between the two countries, Farrell said, will take time. “It’s a marathon, folks,” she said. “Wear comfortable shoes.”