US slams slow, opaque Indian trade policy

The United States attacked India's trade policy on Wednesday, criticising its barriers to agricultural imports and retail sector investment and warning that it may not have shaken off the red tape and trade restrictions that has long plagued foreign business.
The broadside from US Ambassador Michael Punke was part of India's trade policy review, a regular examination of trade liberalisation that every member of the World Trade Organisation (WTO) has to go through at the hands of its peers. Punke said the lack of transparency helped explain why India was ranked 165th out of 183 in the World Bank's "Doing Business" report. Stumped US trade officials had repeatedly been forced to ask India to explain its policies to prepare for the review.
"We, ourselves, became increasingly amazed at how many matters we found to be important and for which we were unable to obtain answers independently," Punke said, according to a transcript of his remarks.
The US criticism was far stronger than a WTO report issued as a starting point for the debate, which had largely welcomed India's efforts to open trade, while disapproving of its frequent tweaks to trade policy for political reasons. In a list of criticisms, Punke decried "exceedingly high" tariffs in agriculture and a "severely restricting" government procurement regime.
Recognising India's need to fight inflation, he called for a strategy of lowering food prices with significant, long-term reductions in agricultural tariffs and the removal of "unjustifiable" impediments to agricultural imports based on health concerns and other technical barriers to trade.
While its policy in agriculture, India's biggest employer, was doing "a disservice to consumers and producers", it had also done little to develop the largest sector of its economy, services, with multiple policy initiatives stalled for several years, Punke said.
Market opening had helped the information technology sector to flourish, so it was disappointing to see India charting a different course in other areas, Punke said. "For example, the past year has witnessed policies, already adopted or being considered, that explicitly shut out imports entirely ... or require private entities to source a significant amount of their purchases from manufacturers in India, as in the case of policies on electronic products and telecom equipment. The United States was also worried by recent signals that India might limit foreign direct investment in sectors such as pharmaceuticals and banking, which had previously flourished thanks to more open policies.