Despite India’s ongoing economic reform efforts, US exporters continue to encounter tariff and non-tariff barriers that impede the import of American products to India, an official report has said.
In its report 2012 National Trade Estimate Report on Foreign Trade Barriers, the US Trade Representatives (USTR) have said the US has actively sought bilateral and multilateral opportunities to open India’s market.
“The structure of India’s customs tariff and fees system is complex and characterised by a lack of transparency in determining net effective rates of customs tariff, excise duty and other duties and charges on imports into India,” said the India section of the report.
US goods trade deficit with India was $14.5 billion in 2011 up $4.3 billion from 2010, it said.
US goods exports in 2011 were $21.6 billion, up 12.4 per cent from the previous year. Corresponding US imports from India were $36.2 billion, up 22.5 per cent.
Noting that India is currently the 17th largest export market for US goods, the report said US exports of private commercial services (excluding military and government) to India were $10.3 billion in 2010 (latest data available), and US imports were $13.7 billion.
Sales of services in India by majority US-owned affiliates were $13.1 billion in 2009 (latest data available), while sales of services in the US by majority India-owned firms were $7.2 billion.
US FDI
The stock of US foreign direct investment (FDI) in India was $27.1 billion in 2010, up from $20.9 billion in 2009, it said adding, that US FDI in India is led by the information, professional, scientific, and technical services, and manufacturing sectors.
In its report, USTR said India’ procurement practices and procedures are often not transparent.
Foreign firms also rarely win Indian government contracts due to the preference afforded to Indian state-owned enterprises and the prevalence of such enterprises.
Tax exemption
USTR said India’s tax exemption for profits from export earnings has been completely phased out, but tax holidays continue for certain export-oriented enterprises and exporters in Special Economic Zones.
“In addition to these programmes, India continues to maintain several other export subsidy programmes, including duty drawback programmes that appear to allow for drawback in excess of duties levied on imported inputs,” it said, adding that India also provides pre-shipment and post-shipment financing to exporters at a preferential rate.