The United States has accused India of setting up trade barriers that harm American manufacturers and farmers, saying the country followed anti-competitive trade practices and that its tariffs remained remarkably high, specially in the agricultural sector.
In its annual complaint against various trade barriers against 61 countries, including Pakistan, China and the European Union, the US has compiled a 672-page report, which is designed to guide American negotiators over the next year in trying to attack barriers seen as doing the most damage to its companies.
In a 14-page, closely typed list against India, the report claimed that the country "suffers from slow bureaucracy and regulatory bodies that reportedly apply monopoly and fair trade regulations selectively.
"With no fear of government action and with a clogged court system where cases linger for years, Indian firms face few if any disincentives to engage in anti-competitive business practices."
India also has an unpublished policy that favours counter-trade. Private companies are encouraged to use counter-trade. The Indian government does try, nevertheless, to eliminate use of re-exports in counter-trade, it said.
India's tariffs remain remarkably high, especially in the agricultural sector. US producers encounter tariff and non-tariff barriers that impede their exports. While American exports continued to grow in 2004, substantial expansion in US-India trade will be unlikely without significant additional Indian liberalisation, the report said.
India, however, has made substantial progress in restructuring the tariff applied to non-agricultural goods, it noted.
India's medicines policy is an issue of concern for US pharmaceutical companies. Indian states also fail to apply consistently certain national laws and regulations. This creates uncertainty for American companies exporting to, and investing in, India, the trade barriers report said.
India's implementation of its anti-dumping regime has raised concerns in key areas such as transparency and due process. From the second half of 2003 through the first half of 2004, which is the most recent 12-month period for which World Trade Organisation statistics are available, India imposed 38 final anti-dump ing measures, more than any other WTO member, and ranked second in the number of initiations, it said.
On Dabhol power project, the report said although the new government wants to increase infrastructure investment, high-profile commercial disputes in the power sector, such as the DPC project, dampen investor sentiment.
The United States continues to try to persuade the Indian government, to attract investment. The country needs to provide a secure legal and regulatory framework for the private sector, the report said.
On import licensing, the report said as a result of a WTO dispute settlement action the US initiated in 1997, India has eliminated its import licensing requirements for most consumer goods. Importers of vehicles of any type, however, face restrictive and trade-distorting import practices.
In addition, India continues to maintain a negative import list. India has, however, liberalised many restrictions on the importation of capital goods, it noted.
About the fertiliser subsidy regime, the US report noted that the Indian government subsidizes di-ammonium phosphate. Beginning in 2000, the subsidy differential between domestically produced DAP and imports put DAP importers at a considerable disadvantage.
US imports shrank from a high of $414 million in 1999 to approximately $100 million in 2004 even though Indian domestic production could not keep pace with rising demand, it claimed.
On Customs Procedures, the report said the US is working through the WTO Committee on Customs valuation to obtain further information from India on the operation of these amendments and will continue to examine the customs valuation procedure for consistency with India's obligations. Certain customs procedures impede importation of automobile products, it claimed.
The Intellectual Property Rights Protection in India is weak but likely to improve as a result of expanded patent coverage effective January 1, 2003. The US Trade Representative placed India in the "Priority Watch List" as part of the 2004 Special 301 review, it noted.
About equity restrictions, the report noted that most sectors of the Indian economy are now partially open to foreign investment with certain exceptions. The Indian government continues to prohibit or severely restrict Foreign Direct Investment in certain politically sensitive sectors, such as agriculture, retail trading, railways and real estate.
Foreign industries have expressed concern with the Indian government's stringent and non-transparent regulations and procedures governing shareholding. Current price control regulations have undermined incentives to increase equity holdings in India, the report said.
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