‘Regulatory stability in India is an issue’
India and the U.S. need a framework trade agreement that deals with all the trade issues they face such as tariff wars, price caps, data localisation and sanctions on energy trade with Iran, said the U.S.-India Business Council President Nisha Biswal, who also flagged a lack of “regulatory stability” as a major problem for American investors in India.
“I have long been a proponent of a trade framework agreement between India and the United States. What I do know is if you do try to resolve the issues case-by-case, then each issue becomes an existential situation, but if you try to have a conversation on a group of issues, there is more incentive to find some areas of accommodation for the other,” Ms. Biswal said, dismissing concerns that India-U.S. relations are in a “big crisis” yet as talks between U.S. Trade representatives and the Commerce Ministry are still ongoing.
Tiff on tariffs
Indian retaliatory tariffs worth $235 million on 29 American products will come into effect on August 4, in response to the U.S.’ decision to raise import duties on Indian steel and aluminium. The two sides are bitterly divided over a Reserve Bank ruling that will make firms operating in India to move all data servers to India alone, by October. The first round of U.S. sanctions against Iran will go into effect on August 6, and a U.S. team was in Delhi to discuss U.S. demands for India to zero out its oil imports from Iran by November 4, another point of contention.
“India has moved tremendously on diminishing its dependence on Iranian oil… So I know that the movement is in the right direction,” said Ms. Biswal, holding out hope of a compromise. Ms. Biswal was the U.S. Assistant Secretary of State for Central and South Asia (2014-2017) under President Obama when the six-nation JCPOA multilateral nuclear deal was signed.
The former diplomat called for more engagement at the political level, welcoming the possible scheduling of the “2+2” ministerial talks in September, and said that for the first time in 43 years, the USIBC would hold its annual general meeting in India, not Washington, at the same time.
However, indicating that U.S. investor interest was slowing ahead of Indian polls, the council’s president said measures by the NDA government on price controls on medical supplies, data privacy and market access lead to ‘blunt instrument’ policies that can have the effect of ‘depressing investment.’
“Everyone understands that during election season, whether in America or in India, you will not see the biggest or boldest policies, so the sentiment is to wait,” Ms. Biswal said, adding that she personally remained “bullish” on India.