US and European business have stepped up pressure on the Indian government to improve the atmosphere for investment in the country by implementing the goods and services tax and boosting intellectual property rights.
Preceding US President Barack Obamas visit to India on Republic Day (January 26), the business are pressing for the government to reduce tariff, ease taxation and cut transaction costs.
“By reducing import tariffs and export duties in key industrial sectors, by raising investment caps and eliminating local content and certification requirements across all sectors and by strengthening the protection and enforcement of intellectual property rights, India can establish the kind of trade and investment regime that clearly sets it apart from competitors in Asia and beyond,” stated a letter jointly drafted by National Association of Manufacturers (NAM), US, BUSINESS EUROPE, European Chemical Industrial Council and European Federation of Pharmaceutical Industries and Associations (EFPIA), among others.
Finance Minister Arun Jaitley recently said it might implement good and services tax (GST) by 2016, although it remains a key challenge to get the states on board.
US had been particularly critical of some of Indias trade and investment policies such as mandatory domestic content requirement, retrospective transaction and IPR and patents regime for over two years now. European businesses have also been voicing concerns on some of the steps taken by the previous United Progressive Alliance government, not yet revoked by the National Democratic Alliance government, though it has taken certain immediate steps to increase foreign investment in the country.
“Adopting a single federal goods and services tax and swiftly implementing the WTO trade facilitation agreement would increase transparency, cut business costs and contribute to growth in each of our economies,” according to the letter that was sent to Nirmala Sitharaman, minister of state (independent charge) for commerce and industry.
Since the new government came to power after a decade-long rule of the previous UPA government, a number of steps had been taken to improve Indias business environment and its ranking in the World Banks Ease of Doing Business ranking.
The new government had come under scathing attack from all the key countries for vetoing the World Trade Organizations (WTO) Trade Facilitation Agreement, which it has now agreed to adopt and implement.
In the letter the American and European business chambers and industry associations also pressed the Indian government to address their specific concerns through the various dialogue mechanisms such as the ongoing India-EU Free Trade Agreement and India-US Trade Policy Forum.
The BJP government, which came to power in May, have eased foreign direct investment norms for sectors such as railways, real estate and defence. But it has not taken steps to address some of the significant concerns such as retrospective taxation and transfer pricing rules.
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