Traverse City Record-Eagle


March 14, 2013

Businesses bemoan India trade 'protectionism'

WASHINGTON — American businesses complained to lawmakers Wednesday about Indian trade protectionism, contending that tariff and regulatory barriers are shutting out foreign firms despite the nation's market-opening reforms.

Advocates for the pharmaceutical, information technology and agricultural industries detailed their grievances to a House subcommittee on trade where lawmakers also grumbled about Indian policies that favor local producers.

"They are for free trade on their terms," said Democrat Rep. Richard Neal.

There's strong bipartisan support for deeper U.S.-India ties, which have been pushed by the administrations of George W. Bush and Barack Obama, and trade has grown markedly in the past decade and is approaching the $100 billion mark. But experts say that total is small, considering the size of the two economies.

"We now need our economic relationship to catch up to the historic progress of our diplomatic and security cooperation," said Daniel Twining, senior fellow for Asia at the German Marshall Fund of the United States.

He said U.S. trade with India is only one-seventh of U.S. trade with China, despite the fact that India is a strategic partner and China is a strategic competitor. Twining said negotiations for a bilateral investment treaty are mired in bureaucracy and called for talks on a free trade agreement.

Arvind Subramanian of the Peterson Institute of Economics said India has seen a sharp slowing in economic growth, and in response embarked in late 2012 on ambitious economic reforms, opening to more foreign investment, such as in multi-brand retail.

The reform effort championed by Prime Minister Manmohan Singh faces stiff political and trade union opposition, and Subramanian said few countries have opened up to foreign capital since the global slowdown to the extent India has.

But he said protectionism has re-surfaced, with India still favoring domestic providers in areas such as banking, telecommunications, retail and solar panels.

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