One of the major issues raised by US trade tepresentative Ron Kirk during a meeting with commerce minister Anand Sharma in Washington, DC, on Thursday was that of allowing Foreign Direct Investment or FDI in multi-brand retail in India.
In an exclusive interview with Business Standard after the meeting, Sharma, however, said it was not India’s first priority and the Indian government would act on it as part of a “staggered reform roadmap.”
On his way from Washington, DC to New York, Sharma said he had informed Kirk that consultations with stakeholders had been completed and the Committee of Secretaries had given its final report to him for consideration.
But Sharma made it clear in the interview that all issues, including FDI in retail, would take a backseat to the New Manufacturing Policy, which was his priority. He said the policy was expected to come up for discussion in the Union cabinet “in the next few weeks”. FDI in multi-brand retail and other issues will follow in subsequent weeks.
The two officials also discussed the proposed Bilateral Investment Treaty. They agreed to hold two rounds of discussions on this subject, with the first round slotted next month. Sharma and Kirk are scheduled to co-chair the next round of the Indo-US Trade Policy Forum or TPF in January. Sharma said the two rounds of talks on the BIT would be completed by then.
Business groups like the US India Business Council have been lobbying for a speedy agreement on the BIT, but the process has been held up partly due to the internal review in the US on its model for such a treaty. Sharma said Kirk had agreed that an early closure on the BIT was in both countries’ interests.
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For his part, Sharma brought up India’s concerns regarding the H1B and L1 work visas, including the hike in visa fees, and what the minister described as an increase in the rejection rate of Indians applying for these visas this year. He also pressed for a Totalisation Agreement with the US, which would help Indian workers in the US draw benefits from their contributions to American programmes like Social Security. Sharma noted that India and the US both have similar agreements with European nations, and therefore why not with each other? “This point was well taken,” the minister said.
Asked if he was concerned at the lack of progress on these issues, despite India having raised them repeatedly, Sharma said Kirk had promised to analyse the problems expeditiously and that his office had already conveyed India’s concerns to the US State Department.
A senior US trade official told Business Standard that during their meeting, the two officials “reaffirmed their commitment to helping ensure that the TPF produce concrete outcomes that would be meaningful to workers in both countries.”
The US trade official added that Sharma had also expressed appreciation for the progress made by the US Senate on the Generalised System of Preferences or GSP legislation and had stated that he looked forward to its final Congressional reauthorisation.
Sharma said he suggested to Kirk that they should consider a staggered approach to resolve the stalemate on the Doha round of WTO talks. “There is enough on the table from both the developed and the developing countries to work out agreements on various issues,” he said. Sharma said talks could be held in two or more stages, but it was important not to lose whatever had been already agreed upon.
The commerce minister said the USTR acknowledged his concerns and explained that the US wanted to find “a middle ground” on the Doha talks.
The two officials also noted the “positive investment climate” and the growth in bilateral trade. Sharma said he expected bilateral trade in goods and services to cross $100 billion this year.