U.S. EXPORTS, INVESTMENT, INDIA, ITC

Report Identifies Barriers Hindering U.S. Exports to and Investment in India

Wednesday, December 24, 2014

Sandler, Travis & Rosenberg Trade Report

The International Trade Commission has issued a report that finds that Indian policy barriers represent a significant hindrance to U.S. exports to and investment in the South Asian giant. The report features the results of an ITC survey of U.S. firms in selected industries that are currently doing business in India, a quantitative analysis (using economic modeling) of the effects of Indian policy measures on U.S. workers and the U.S. economy, and qualitative research into these effects. It also includes case studies and examples illustrating ways that the policies affect particular companies or industries.
Highlights of the report are as follows.
- the share of U.S. companies substantially adversely affected by restrictive Indian policies rose from 18.8% in 2007 to 26.1% in 2013 (shares for individual sectors in 2013 ranged from 7.7% to 44.1%)
- over 60% of the affected companies have made strategic changes in response to these barriers, most often directing fewer resources to the Indian market
- policies in two areas – tariffs and customs procedures and taxes and financial regulations – have the heaviest effects on U.S. companies (other issues, including investment and intellectual property policies, have large negative effects on specific industries)
- if tariff and investment restrictions were fully eliminated and standards of intellectual property protection were made comparable to U.S. and Western European levels, U.S. exports to India would likely rise by two-thirds and U.S. investment in India would roughly double
In a joint statement issued following the release of the report, the chairmen and ranking members of the House Ways and Means and Senate Finance committees referred to the current moment in U.S-India relations as “pivotal.” The lawmakers are hopeful about the possibility of enhanced bilateral trade and investment relations with India but remain concerned about “systemic and continuing market access barriers identified in the ITC’s report that undermine a market-based path to development for India and diminish opportunities for U.S. workers and businesses.”
The ITC is conducting a second investigation of India’s trade and investment practices that is seeking information on India’s policies since the first investigation. The results of this assessment are scheduled to be submitted to Congress by Sept. 24, 2015.