Farmers Movement Archive

India tough place for business: US report

NEW DELHI: The US State department has said that India remains a challenging place to do business despite some of the reform measures, such as labour and farm laws, initiated by the government. “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,” it said in the latest Investment Climate Statements. The stand is in line with the US government stance on multiple issues with the India too accusing Washington of maintaining several restrictions. Besides, Indian authorities have often argued that the policies do not violate India’s international commitments. While liberalising FDI has been a key theme of successive governments, the US complained of stakeholders being left out of the consultation process. It also pointed to FDI rules for aviation, where 100% overseas flows have been permitted, while the substantial ownership and effective control (SOEC) rules that mandate majority control by Indian nationals have not been clarified yet. Similarly, it was critical of “discriminatory” FDI policy for insurance sector due to the Indian management and control rider, although the ceiling was increased to 74% earlier this year. A major area of worry is the data localisation and storage requirements. It said RBI’s order on storing data on payment transactions within the country has led to significant compliance costs and increased risk of cybersecurity vulnerabilities, although American banks have managed to comply with the requirement. Similarly, it was critical of the Personal Data Protection Bill. “The localisation of all ‘sensitive personal data’ being processed in India could directly impact IT exports. In the current draft, no clear criteria for the classification of ‘critical personal data’ has been included,” it said. The other area of concern is the equalisation levy on tech companies, where the US had threatened retaliatory action. It also flagged the retrospective tax issue.

The Times of India

2021-07-23

Business