U.S. Exports to and Investment in India Would be Significantly Higher Without Barriers, Says USITC

U.S. exports to and investment in India would be significantly higher if not for Indian policy barriers, according to the U.S. International Trade Commission (USITC) in its report Trade, Investment, and Industrial Policies in India: Effects on the U.S. Economy.

The USITC, an independent, nonpartisan, factfinding federal agency, prepared the report at the request  of the House Committee on Ways and Means and the Senate Committee on Finance.

As requested, the report provides information on the effects of a wide range of Indian policies that limit U.S. exports to and investment in India.  These policy measures include tariffs and customs procedures, foreign direct investment restrictions, local-content requirements, treatment of intellectual property, taxes and financial regulations, regulatory uncertainty, and other nontariff measures, such as unclear legal liability, price controls, and sanitary and phytosanitary standards.

The report features the results of a USITC 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 follow.

• The share of U.S. companies substantially adversely affected by restrictive Indian policies rose from 18.8 percent to 26.1 percent between 2007 and 2013.  Shares for individual sectors in 2013 ranged from 7.7 percent to 44.1 percent.  [Read More]
• Over 60 percent of the affected companies have made strategic changes in response to these barriers, most often directing fewer resources to the Indian market.  [Read More]
• 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.  [Read More]
• If tariff and investment restrictions were fully eliminated and standards of IP protection were made comparable to U.S. and Western European levels, Commission model results indicate that U.S. exports to India would rise by two-thirds, and U.S. investment in India would roughly double.  [ReadMore]
• Seven case studies highlight the effects of particular policies on selected U.S. companies or industries.  They describe:

• the effects of certain duties on the wine and spirits industry;
• the effects of recent patent decisions on the pharmaceutical industry;
• the need to find new strategies to combat piracy in the content and media sector;
• barriers to expanding local manufacturing in information and communication technology,  which increase the costs for U.S. companies to access the Indian government procurement market;
• changes in business practices in response to restrictions on e-commerce;
• recent policies that have constrained U.S. exports of certain medical devices; and
• deterioration in the policy environment governing clinical research trials, which  has led to a decline in clinical research activity in India.