NAM, Chamber to Obama: Get Tough on Indian Trade Practices

President urged to address IP, 'forced localization' issues with Indian prime minister.

Citing accelerating concern about “discriminatory actions by the Indian government,” NAM Vice President of International Economic Affairs Linda Dempsey urged President Obama to address unfair trade policies in his meeting with Prime Minister Manmohan Singh in Washington, D.C. on Friday.

NAM, the U.S. Chamber of Commerce and other groups have protested recent actions by Indian officials to revoke patents, deny copyrights and pursue a policy of “forced localization” in which companies must manufacture goods in India in order to sell them there.

The Indian government’s actions are designed to “help a few Indian companies at the expense of everyone else,” Dempsey charged at a press conference held today.

There has been a "rapid deterioration in India's IP climate," said Mark Elliot, an executive vice president with the U.S. Chamber of Commerce. He warned that the erosion of IP rights will make "investment in India difficult." Elliott said foreign direct investment in India had fallen from $35.1 billion in 2011-12 to $22.4 billion a year later, a 36% decrease.

On September 24, 14 governors sent a letter to the president noting that businesses in their states had raised concerns about India’s intellectual property policies and about the “implementation of industrial policies that benefit India’s local industries at the expense of U.S. companies.”

In February, the U.S. Trade Representative requested the World Trade Organization to settle a dispute with India concerning domestic content requirements for solar equipment. The U.S. charged the Indian policy, announced in January 2010, required solar energy producers to use Indian-manufactured solar cells and modules and provided subsidies for developers who used domestic equipment instead of imports.

On August 2, the leaders of the Senate Finance Committee and House Ways and Means Committee requested that the U.S. International Trade Commission investigate India’s trade practices.

“India is an important strategic partner of the United States, yet U.S. exports of goods and services to India remain low,” the congressional leaders noted in a letter to ITC Chairman Irving A. Williamson. “In 2011, U.S. goods exports to India – the world’s second most populous country – were just $22.3 billion. Similarly, recent data indicates that U.S. private commercial services exports, sales of services by majority U.S.-owned affiliates, and U.S. foreign direct investment (FDI) in India were also low.”

The letter pointed out that India has “a complex, non-transparent tariff and fee system and byzantine and overburdensome customs procedures, and it maintains significant tariff and non-tariff barriers to U.S. goods and service participation in sectors including retail and agriculture. More recently, India has introduced new localization-forcing measures such as local content and technology transfer requirements in the green technology and information and communications technology sectors.” It added that the Indian government was applying its patent law “in a discriminatory manner, particularly against innovative U.S. pharmaceutical companies, so as to advantage its domestic industries.”

In June, NAM and the U.S. Chamber of Commerce’s Global Intellectual Property Center formed the Alliance for Fair Trade with India (AFTI). At the time, Dempsey said, “India’s unfair trade practices against U.S. manufactured exports is putting jobs at risk and harming American manufacturing workers.”

Dempsey told reporters that the Indian policies affect not just U.S. firms, but is “definitely an issue of global concern.” For example, in August, the Indian Express newspaper reported that Nokia had told the government that India was its “least favorable market” in which to operate. Nokia issued a statement that it was “in discussions with the central government and state government over ways to bring greater clarity to the business environment in India.”

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