India 'challenging place' to do business: US State Department

NEW DELHI:  Despite taking up many reforms and improving its position in ease of doing business index, India still “remains a challenging place” to do business, the US State Department said in a report.

“India, however, remains a challenging place to do business. New protectionist measures, including increased tariffs, procurement rules that limit competitive choices, sanitary and phytosanitary measures not based on science, and Indian-specific standards not aligned with international standards, effectively closed off producers from global supply chains and restricted the expansion in bilateral trade,” the  US State Department, in a report ‘2021 Investment Climate Statements: India’ released on Wednesday, said.

It also said that some rules are written in a way which can be discriminatory. “Some government policies are written in a way that can be discriminatory to foreign investors or favor domestic industry. For example, approval in 2021 for higher FDI thresholds in the insurance sector came with a requirement of “Indian management and control,” it noted, with a special mention of equalisation levy on US digital giants like Amazon and Google.

The report also pointed that India currently lacks an effective system for protecting against unfair commercial use, as well as unauthorised disclosure, of undisclosed tests or other data generated to obtain marketing approval for pharmaceutical and agricultural products.

“The US government and stakeholders have also raised concerns with respect to allegedly infringing pharmaceuticals being marketed without advance notice or opportunity for parties to resolve their IP disputes,” it added. These two issues were also biggest hurdle in the India -US bilateral trade negotiation, which is pending since last year.

The report however was supportive of the fiscal support during Covid-19. 

There was also mention of political risk where it mentioned CAA protest and Kashmir issue. 

The US government continued to urge the government of India to foster an attractive and reliable investment climate by reducing barriers to investment and minimising bureaucratic hurdles for businesses.

What report says

• Increased tariffs, procurement rules, sanitary and phytosanitary measures not based on science, and Indian-specific standards not aligned with international standards

• India lacks an effective system to safeguard unfair commercial use, unauthorised disclosure, of undisclosed tests or other data for approval of pharmaceutical and agricultural products

• Govt policies are written in a way that can be discriminatory to foreign investors or favour domestic industry

• Raises issue of alleged infringing pharmaceuticals being marketed without advance notice for parties to resolve IP disputes

• Also flags concerns over political risks such as CAA protest and Kashmir issue