Revision as of 16:02, 9 April 2019

Creation of jobs

2017/ Indian companies create over 1 lakh jobs in US

The Times of India November 15, 2017

HIGHLIGHTS

Indian firms are among the fastest growing investors in the US, contributing to growth and job creation in the US economy, a lawmaker said

The top five states in which Indian companies have generated maximum employment are New Jersey, Texas, California, New York and Georgia

Indian companies have created more than 113,000 jobs in the US and invested nearly $18 billion in the country, according to an annual report which gives state-by-state breakdown of the tangible investments made and jobs created by 100 Indian firms doing business in America and Puerto Rico.

The report titled 'Indian Roots, American Soil', which was released by Confederation of Indian Industry (CII) on Tuesday, states that Indian companies have also contributed $147 million towards corporate social responsibility and $588 million as research and development expenditures in the US.

Together, 100 Indian companies employ 113,423 people across 50 states, the District of Columbia and Puerto Rico, the report said, adding that the total value of tangible investments made by these companies exceeds $17.9 billion.

The top five states in which Indian companies have generated maximum employment are New Jersey (8,572 jobs), Texas (7,271 jobs), California (6,749 jobs), New York (5,135 jobs) and Georgia (4,554 jobs).

According to the report, the top five states in which Indian companies have contributed the highest foreign direct investment are New York ($1.57 billion), New Jersey ($1.56 billion), Massachusetts ($931 million), California ($542 million) and Wyoming ($435 million).

The average amount of investment received from Indian companies per state/territory is $187 million, the report said, noting that 85 per cent of the companies plan to make more investments in the US.

As many as 87 per cent of the companies plan to hire more employees locally in the next five years. Indian industry and professionals are making significant contributions to the US economy, said Indian Ambassador to the US Navtej Sarna.

"The presence and reach of Indian companies continue to grow each year as they invest billions of dollars and create jobs across the United States," he said.

Chandrajit Banerjee, CII director general said the story of Indian investment in the US is one that showcases how intertwined the two countries are that contribute to each other's success. Indian firms are among the fastest growing investors in the US, contributing to growth and job creation in the US economy, said Senator Chris Van Hollen. As the world's oldest democracy and the world's largest democracy, a strong US-India partnership is vital for the 21st century, said Congressman Ami Bera.

The friendship between the United States and India has continued to grow under President Trump's administration, said Congressman Pete Sessions. Indian businesses have brought hundreds of millions of dollars and thousands of jobs to Texas and, at the same time, the reforms led by Prime Minister Modi have opened doors for American companies to expand their operations in India, he said.

"I am glad to see, as CII's event today proves, bonds between our nations - both commercial and strategic - continue to grow stronger," Sessions said.

"According to CII's survey, Indian companies in Virginia have invested over $37 million in my state, and I can only hope that they will continue to invest in Virginia and that our engagement with these companies will continue to grow," said Congressman David Brat. In addition to spurring economic activity, particularly in North Carolina, this type of investment serves to strengthen the bond between our two countries, said Congressman George Holding. The report shows that Indian companies have invested over $195 million in the state of Illinois, and created over 3,800 jobs, said Congressman Raja Krishnamoorthi.

"I hope that Indian companies continue to put down roots and invest in our state, as our economy and community are strengthened by their engagement with us," he said.

Earnings from the US

Data earnings: 2017

At $11bn, India's data earnings from the US is 20x what next 9 bring- 2017
From: May 26, 2018: The Times of India

See graphic:

At $11bn, India's data earnings from the US is 20x what next 9 bring- 2017

Trade issues

2018: Harley Davidson, 100% duty, Modi and Trump

Chidanand Rajghatta, Why Trump is obsessed with Harley in India, February 28, 2018: The Times of India

US President Says ‘Fantastic’ And ‘Beautiful’ Modi Sweet-Talked Him On Motorcycle Tariffs

US President Trump lit into India again on Monday in a rambling critique on trade issues, picking on a minor dispute with New Delhi over motorcycle tariffs to highlight his grievance that other nations have taken advantage of previous US administration’s negligence on trade. For the second time this month, Trump latched on to an issue that does not even account for 0.05% of the $140 billion US-India bilateral trade, itself ranked tenth in the US commercial sweepstakes.

After lamenting how China, Canada, and Mexico — the top three American trade partners — were ripping off the US, Trump settled on the Harley Davidson dispute with India to build a case for his version of fair trade. “So we want fair trade deals. We want reciprocal trade deals. Scott Walker has a wonderful company called Harley Davidson in Wisconsin. Right? Great. So when they send a motorcycle to India, as an example, they have to pay 100 percent tax — 100 percent,” Trump began, even though he acknowledged Prime Minister Narendra Modi personally intervened to reduce it to 50%. It isn’t enough for Trump.

“Now, the Prime Minister, who I think is a fantastic man, called me the other day. He said, “We are lowering it to 50 per cent.” I said, “Okay, but so far we’re getting nothing.” So we get nothing, he gets 50 (per cent), and they think we’re doing — like they’re doing us a favour. That’s not a favour. And you know what I’m talking about,” he rambled on.

Trump then revealed that Harley itself had not asked for concessions and he was the one who was spending time on an issue that is laughably insignificant in terms of US world trade. “It’s a great company. When I spoke with your chairman or the president of Harley, they weren’t even asking for it because they’ve been ripped off with trade so long that they were surprised that I brought it up. I’m the one that’s pushing it more than they are, but it’s unfair,” he said. “And India sells us a lot of motorbike…So when they have a motorbike — a big number, by the way — they have a company that does a lot of business. So they have a motorcycle that comes into our country — We get zero. They get 100 percent, brought down to 75; brought down, now, to 50. Okay,” he said.

Then he returned to Modi. “And I wasn’t sure — he said it so beautifully. He’s a beautiful man. And he said, ‘I just want to inform you that we have reduced it to 75, but we have further reduced it to 50.’ And I said, ‘Huh.’ What do I say? Am I supposed to be thrilled? And that’s not good for you people, especially as governors. It’s just not right. And we have many deals like that,” he told a meeting of the nation’s governors, who were further gobsmacked when he told them he would have confronted the Florida shooter unarmed.

India exports less than 1,000 motorcycles to US; African and Latin-American countries buy many times more. Besides, Harley manufactures its bikes in India now, and the tariff would largely be on the few imported bikes and semi- and completely knocked down components.

The US president’s obsession with Harley and its effort to get greater traction in India is attributed to the motorbike users demographic profile — mostly white, middle-aged men in middle America who typically voted for Trump as attested by “Bikers for Trump” rallies during the election. Trump also narrowly won narrowly won Wisconsin (47.2% to Hillary’s 46.5%), where the Harley headquarters is located (in Milwaukee) and ostensibly wants to show his gratitude to the state’s working class voters who ditched Democrats, making him the first Republican candidate to carry the state since Ronald Reagan in 1984.

So despite the insignificance of the dispute and the negligible numbers, he wants to make it a signature issue on manufacturing, ignoring the fact that Harley manufactures from India. “It is an easy illustrative example for his voters because Harley is an iconic brand,” one trade expert told TOI on background. “US and India actually have much bigger trade disputes, on medical devices for example.”

What Trump also doesn’t know or prefers to ignore is Harley’s entry to India was premised on a “mangoes for motorbikes” deal in 2007 between then President George Bush and PM Manmohan Singh, an agreement that took a long time to fructify for India because mango exporters had to jump through all kinds of hoops (including irradiating mangoes to get rid of pests), making the mangoes almost unaffordable in the US (up to $36 for a box of 12).

Duty-free concessions on 50 Indian products’ import revoked

US revokes duty-free privileges, November 2, 2018: The Times of India

Imports Of 50 Indian Products Face Heat Over Trump Stand

The US on Thursday revoked duty-free concessions on import of at least 50 Indian products, mostly from handloom and agriculture sectors, reflecting the Trump administration’s tough stand on trade-related issues with New Delhi.

The federal register issued a notification, listing out 90 products that were so far subject to duty-free provisions under the Generalized System of Preferences (GSP).

US President Donald Trump issued a presidential proclamation on Tuesday, leading to the removal of these products from the privilege beginning November 1. These products “will no longer qualify for duty-free preferences under the GSP programme but may continue to be imported subject to regular Most Favored Nation duty-rates,” an official of US Trade Representative (USTR) said.

A review of the products indicates that the presidential proclamation is not country specific, but product specific. With India being the largest beneficiary of the GSP, it has been hit the most by the latest decision of the Trump administration.

The GSP, the largest and oldest US trade preference programme, is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.

A count of these products indicated that at least 50 of them are from India. Notably, India is the largest beneficiary of the GSP. In 2017, India’s duty-free export to the US under the GSP was over $5.6 billion.

The volume of India’s export to the US impacted by the latest move of the Trump administration is not known yet, but the list of products from which duty-free import provision has been removed reflects that a large number of small and medium size business could be impacted, in particular handloom and agricultural sector.

In his presidential proclamation, Trump said that certain ‘de minimis’ waivers will no longer be granted for any product, regardless of the country source, that exceeds the GSP’s Competitive Need Limitation (CNL) thresholds. The CNL thresholds are quantitative ceilings on GSP benefits for each product and designated beneficiary country.

2019: GSP withdrawal

US plan to end preferential trade status won't have much impact: India, March 5, 2019: The Times of India

The US decision to withdraw duty benefits on Indian products under the Generalized System of Preferences (GSP) programme will not have a significant impact on exports to America, a top government official said.

India exports goods worth $5.6 billion under the GSP, and the duty benefit is only $190 million annually, commerce secretary Anup Wadhawan said.

India mainly exports raw materials and intermediate goods such as organic chemicals to the US, he said. The response comes after the US government said it intends to end the preferential trade status granted to India

"GSP withdrawal will not have a significant impact on India's exports to the US," the secretary told reporters here.

The US demand for relaxation in norms for exports of medical devices and dairy products are non-negotiable to India.

US President Donald Trump has said he intends to end the preferential trade status granted to India and Turkey, asserting that New Delhi has failed to assure America of "equitable and reasonable" access to its markets, an announcement that could be seen as a major setback to bilateral trade ties.

The US Trade Representative's Office has said that removing India from the GSP programme would not take effect for at least 60 days after notifications to Congress and the Indian government, and it will be enacted by a presidential proclamation.

As many as 1,900 Indian products from sectors such as chemicals and engineering get duty free access to the US market under the GSP, introduced in 1976.

US to scrap sops on $5.6bn Indian exports

Chidanand Rajghatta, March 6, 2019: The Times of India

President Donald Trump notified the US Congress that he intended to terminate preferential trade terms to India in 60 days, apparently dissatisfied with concessions by New Delhi in response to efforts to force open the Indian market.

India offered to open its agriculture, milk and poultry

markets in response to US warning it would terminate Generalised System of Preferences — under which $5.6 billion of Indian exports to US enjoy zero tariffs — due to lack of reciprocal market access. However, Trump told US lawmakers India “has not assured US it will provide equitable and reasonable access” to its markets and he intends to nix the preferential treatment that India has enjoyed.

Key dispute: Price cap on stents, knee implants

The Indian government reacted cautiously, saying it had sought to address the Donald Trump administration’s concerns. “The (US) department of commerce engaged with various government of India departments concerned with these issues, and India was able to offer a very meaningful way forward on almost all the US requests. In a few instances, specific US requests were not found reasonable and doable at this time by the departments concerned, in light of public welfare concerns reflective of India’s developing country status and its national interest,” it said. It added that higher import of American goods, including oil and natural gas and coal, had helped pare the US trade deficit with India during 2017 and 2018.

At the heart of the dispute is the US insistence that India should remove the price cap on knee implants and stents — which New Delhi now regulates as “essential medicine” but which is a money-spinner for western companies. India declined, saying it had commitments to make such medical devices affordable to Indian patients, but agreed to open up the Indian market for a wide variety of US farm produce – from cherries to chicken to milk products, which New Delhi had long resisted because of reservations over US farm practices.

On the US side, there were concerns about India’s e-commerce and data localisation policies which New Delhi looks at as sovereign issues but Washington sees as putting a crimp on US companies.

In the end Trump rejected the Indian offer as inadequate, surprising New Delhi, which saw him as a dealmaker who would appreciate the openings in the Indian agricultural market that would give him bragging rights in Middle American farm country.

India is the world’s largest beneficiary of the GSP, with nearly 2000 of its products worth $5.6 billion, approximately 12% of its exports to the US, eligible for zero-tariff export. The products include motor vehicle parts,

jewellery, handicrafts, carpets, marine produce and a range of raw materials such as granite (the Vietnam Memorial is built from granite imported from India).

But Indian officials maintain the GSP withdrawal will not be a crushing blow; exports will continue, except they will be subject to tariffs. The reckoning is that some day in the near future India would have had to grow out of the GSP regime (as China has done), which was devised on the 1970s to help developing world countries, and that day might as well be now.

"The trade package is now no longer in discussion. But if the US is willing to review the review, we are open for discussion," said an Indian official.

In fact, Trump despatched a separate letter to lawmakers at the same time as the India letter withdrawing GSP facility to Turkey, with the reasoning that it had reached an economic status that no longer merited preferential concessions.

Although Trump told US lawmakers in his letter that he would “continue to assess whether the Government of India is providing equitable and reasonable access to its markets,” and the withdrawal will kick in only after 60 days through a presidential proclamation, there is little chance of any deal being salvaged in the two month window.

That’s mainly because India’s election code of conduct will kick in soon and the government will be hamstrung for the next two months in offering any more concessions.

Besides, New Delhi appears to have calculated that the tariff concession loss, estimated by commerce ministry officials at between $200 million and $250 million, is not something to lose sleep over. “We just have to take it on the chin and move on,” one official who spoke on background said.

On the geo-political front through, there is some surprise that Trump has put a hex on the so-called strategic ties with India by talking up trade issues with relatively modest financial outcomes – chump change in fact.

The Harley-Davison tariff issue that he raked up several times over the past year is worth a laughably small amount of money. But he made it symbolic of the trade fight he has picked up across the world.

India to impose retaliatory tariff of $235 million on 29 American goods

Sidhartha, No action plan ready against US trade move, March 6, 2019: The Times of India

Top beneficiaries of US GSP, 2017
From: Sidhartha, No action plan ready against US trade move, March 6, 2019: The Times of India

Govt Caught Off-Guard, Ignored Warnings, Hoped To Clinch Deal Through Dialogue

For close to a year, India has been threatening to impose retaliatory tariff of $235 million on 29 American goods to counter the Donald Trump administration’s decision to raise import duty on steel and aluminium goods. But nine months after the plan was announced, the government is still dilly-dallying on countering US government’s assault against Indian exports and visas, even as the American authorities near a deal with China.

The deadline to impose duties on products, ranging from almonds to lentils, has been postponed half-adozen times, with April being the latest cut-off. All these months, the Narendra Modi government had hoped that Trump would go easy and a deal could be reached through a dialogue at the commerce minister level. What the Indian authorities kept ignoring was the US government’s repeated attacks on its policies — ranging from export promotion schemes and farm subsidy to import duties — as well as disputes at WTO.

“We have little choice but to keep our channels of engagement open,” an official told TOI. Several officials suggested that the coming months could see US pressure intensify as Trump readies for reelection, especially on the demand to lower import duties.

What has compounded the problem for the bureaucracy is the lack of a clear strategy to tackle trade issues and a muted response from the political leadership, which seems oblivious to the challenges being faced by exporters — from refund of GST to devising new strategies to tackle the export slowdown. In fact, there have been suggestions from some key functionaries that India should contemplate a trade agreement with the US, a proposal that has been trashed, at least for the moment.

The confusion was on display on Tuesday too as officials from the commerce department, who are usually reluctant to consult the ministry of external affairs on trade issues, opted to get the official response vetted by the foreign office. Government functionaries seemed to suggest that the withdrawal of benefits under the generalised system of preferences would not make a significant dent to India’s exports to the US. Commerce secretary Anup Wadhawan, who has been dealing with US negotiators for the last few years, suggested the hit could be as low as $190 million.

In private, officials admitted, they could do little to counter the “unilateral move” by the US. “In any case a country like India should not be seeking it, if we have ambitions to be on the global high table,” said an officer. But clearly, that was not the case during the meetings with US authorities.

Unlike China, which is America’s biggest trade partner, India is still a fringe player. In 2018, China’s bilateral trade with the US was estimated at $635 billion, compared to India-US trade of under $75 billion in 2017-18. But any action against India is seen to be providing political muscle to Trump. The current Indian government does not have a plan to counter the US offensive, with its proposals for truce rebuffed by the Americans, officials acknowledged.

In a statement, the commerce department detailed how it sought to address Trump administration’s concerns, including on issues such as pricing of stents, which the Modi administration has sought to sell as an initiative to make medicines and medical devices more affordable for the common man.

But there were issues on which there was little manoeuvring space. For instance, the demand for a tariff reduction on several products was seen to be benefiting the Chinese more than the Americans.

US exports to, imports from India

Trade deficit in 2017>18

Govt looks to address trade concerns of US, March 8, 2019: The Times of India

The US trade deficit with India, China and other countries in 2017, 2018
From: Govt looks to address trade concerns of US, March 8, 2019: The Times of India

Sources said while the duty was to be retained at 20%, the total payout was to be capped at around Rs 10,000.

The government has already said it had made it clear that pricing regime for stents and knee implants would be reviewed with a trade margin approach, instead of the current price cap. Similarly, it had moved on several other fronts to ease import rules for cherries and pork, but the US went ahead and decided to issue the notice.

While a response to the US is expected over the next few weeks, the government is keen to avoid any “knee-jerk reaction”. India was the largest beneficiary of the US GSP programme, with exports to the tune of $5.7 billion under the scheme. The government has, however, maintained that the impact will be limited to $190 million.

Sources said there is already sufficient market access for American products, with nearly 80% of the market for stents and implants controlled by US companies. In recent years, there has been a spurt in American exports to India, which shot up 29% to $33 billion in 2018, latest data showed. In fact, India is among a few countries with which US has narrowed its trade deficit.

Many believe that Trump’s move was not reasonable, especially when American companies — from Amazon and Uber to ATC and PepsiCo — were market leaders in India. The pressure on India is seen to be part of Trump’s overall pitch to restrict imports and promote local manufacturing, a strategy that does not seemed to have shown results, at least in trade numbers.

The US view of India’s trade policies

As in 2019

US slams India on data protection, April 9, 2019: The Times of India

The US view of India’s trade policies, as in 2019.
From: US slams India on data protection, April 9, 2019: The Times of India

The US Trade Representative (USTR) has slammed the government’s draft e-commerce policy and attempts to mandate data localisation, while noting that there is enormous scope for India to reduce import duties, which have gone up in recent years. In its annual publication, USTR has also suggested that the government should not engage in “unjustified retaliation” by raising import duties on 29 products in response to the Trump administration’s decision to hike levies on steel and aluminium.

“The US has urged India to work to address the common problem of excess capacity in the global steel and aluminium sectors, rather than engage in unjustified retaliation, designed to punish American workers and companies. The US will take all necessary action to protect interests in the face of such retaliation,” the latest National Trade Estimate Report said.

After threatening to levy higher tariffs, the government has repeatedly postponed the retaliatory action, hoping that the issue can be sorted out via negotiations.

The USTR report is critical of some of the recent moves on data protection. “An only-in-India data storage requirement will hamper the ability of service suppliers to detect fraud and ensure the security of their networks... These data localisation provisions (in the draft Data Protection Bill) would damage the digital economy without supporting privacy. Additionally, the bill would authorise immense fines and criminal penalties in response to data breaches,” USTR said in the report.

Additionally, it has said the “discriminatory and trade-distortive” aspects of the draft e-commerce policy need to be reviewed, including broad-based data localisation and restriction on crossborder data flows. The criticism comes along with the recently-introduced changes to the marketplace model.

A large part of the section dealing with India in the annual publication that looks at trade and other policies across the globe, is related to India’s import tariff regime. “India’s average Most Favoured Nation (MFN) applied tariff rate of 13.8% remains the highest of any major world economy,” it said, adding that the Narendra Modi government’s ‘Make in India’ initiative has resulted in a higher customs tariff on labour-intensive and electronic goods.

It pointed out that India had agreed to maintain average tariffs of 48.5% at WTO, while the actual applied rate was much lower. “Given this large disparity between WTO-bound and applied rates, India has considerable flexibility to change tariff rates at any time, creating tremendous uncertainty for US exporters,” it argued.

Apart from trade skirmishes involving India’s export promotion schemes and farm subsidies, the US has also pointed to the tariffs applied by the government.