The United States Congress has joined the battle against India's new Preferential Market Access rules for procurement of electronic goods announced earlier this year.
On Tuesday, members of Congress from both the Democratic and Republican parties wrote to India's ambassador, Nirupama Rao, asking the Indian government to reconsider its PMA policy and its impact on the information and communications technology sector.
In a strongly worded letter signed by 21 lawmakers, the co-chairs of the Congressional High-Tech Caucus, Doris Matsui and Michael McCaul, wrote: "Top-down industrial policy mandates. . . will only serve to stifle investment and stymie manufacturing and job creation."
The US ICT sector has been up in arms about the PMA policy, and is strongly lobbying the administration and Capitol Hill to address the issue.
Michael Froman, the deputy national security adviser for international economic affairs, is believed to have raised this subject when he met External Affairs Minister S M Krishna in Washington, DC this week.
In an interview, John Neuffer, vice president of global policy at the Washington, DC-based Information Technology Industry Council, a leading business group for the ICT sector, said US industry wants the PMA policy rescinded immediately.
He said this was a high priority for American companies because India is a critically important market.
The ITIC cites studies showing India's information technology and telecom markets are expected to grow to nearly $300 billion by 2015.
American companies have also taken note that India continues to be one of the fastest growing telecom markets despite the global economic slowdown, with the country's total telephone subscriber base growing five-fold in the past six years.
But the concern is not limited to India alone. "India is a very important economy. Other economies watch what it's doing and often mirror what it's doing.
"We're quite concerned that this PMA sets a very unhelpful precedent
Another major concern is that the policy could apply to the private sector. As the Matsui-McCaul letter noted: "This application of local content requirements to private sector entities, in particular, represents an unprecedented interference in the procurements of commercial entities."
US industry plans to keep lobbying to roll back the PMA policy, and Neuffer also pointed to recent talks between industry representatives and Indian government officials at the India-US ICT Dialogue earlier this month.
"The upside is the dialogue was constructive and friendly but I did not sense that there was any significant change of course in the policy.
"We're hopeful the Indian government will make the right choice but we've got no indication so far that that's going to happen," said Neuffer.
This has become the latest irritant in bilateral trade, with the letter from members of Congress pointing to other problems: "Our concerns with the PMA take on greater urgency, given other problematic, discriminatory measures that the Government of India has adopted or is considering in this and other sectors."
The complaints are not one-sided. In his speech at the US India Business Council's annual summit in Washington, DC, this week, Krishna listed pending grievances on India's side: "For our businesses, too, there are pressing issues: whether it is the worsening environment for mobility of professionals, the protectionist sentiments against the global supply chain in services industry, the refusal to even consider a Social Security Agreement that affects the lives of 300,000 non-immigrant Indian professionals in the United States, the unresolved market access issues, or, the persisting presence of India in the Super 301 Priority Watch List and the US Department of Labour's list."
While the two sides reported some progress at the strategic dialogue towards implementing the civilian nuclear agreement with the signing of an MoU between American company Westinghouse and the Nuclear Power Corporation of India, it appears the ICT sector will have to wait its turn.
