India, US move closer on social security pact

The United States today indicated that it was willing to consider setting up of a joint technical working group to address the issues coming in the way of finalising a totalisation agreement with India.

New Delhi, on its part, has made it clear that it is not agreeable to the US stance of linking the requirement for a social security net as a precursor to finalising the agreement. India also made clear that it was adopting a calibrated approach to further opening up of the retail and financial services sector.

Indians working in the US have to mandatorily contribute to social security benefits but are unable to repatriate the same when they leave the US, in the absence of a totalisation agreement between the two countries.

The issue was discussed at a meeting of US Under Secretary for International Trade Franklin Lavin and Commerce Secretary G K Pillai in the capital. Commerce ministry officials said the Indian side pointed out that New Delhi had signed totalisation agreements with countries like Belgium and France, which had not set any pre-conditions.

"It was pointed out that India, which is a developing country, effectively gives a grant of $500 million to the US in the absence of a totalisation agreement. The US has indicated that it will soon have a video conferencing on the matter with senior Indian officials," an official said.

In response to the US demand for further opening up of the financial services sector, the commerce ministry pointed out that India was adopting a calibrated approach on the matter.

"It was pointed out that the Reserve Bank of India has finalised a road map for the gradual opening up of the sector by 2008," an official said, adding that New Delhi raised the issue of absence of a level-playing field for financial institutions in the US.

"A foreign bank wanting to open more branches in India only needs to obtain the permission of the Reserve bank of India. However, an Indian bank wanting to open up branches in the US has to go through the American federal system and then a state regulatory system," an official said.

Banks like State Bank of India and ICICI have long pending applications for opening more branches in the US.

India also raised the issue of extending protection to its traditional knowledge under the patent regime in the US.