The issues pertaining to import tariffs on information and communication technology (ICT) equipment, on which the US has sought duty elimination, has reached the highest corridors of the government with an inter-ministerial panel comprising finance minister Arun Jaitley, commerce and industry minister Suresh Prabhu and IT minister Ravi Shankar Prasad discussing the US’ demand at a meeting last week. According to sources, in the high-level meeting, it was discussed that “India may have to take a considered stand on the issue” so that the commerce ministry’s mandate for negotiations with the US is “unambiguous”.
India has been negotiating with the US for a mutually agreeable bilateral package on several contentious trade issues and one of the critical issue which the US Trade Representative (USTR) was pursuing strongly was tariff on ICT products. Wednesday, The Indian Express reported that the commerce ministry had snubbed the US demand to eliminate duties on seven ICT products, on account that factors such as “serious economic constraints” such as rising current account deficit and rupee depreciation “make it difficult” for India to consider the revenue loss arising out of duty elimination. India has further informed the US that duty reduction on products such as certain telecom network equipment, smartwatches, high-end mobile phones costing over Rs 10,000 and some mobile phone parts, will not benefit the US while imposing a “disproportionate and unbearable stress on a “low income country like India at a time of significant economic stress”.
Further, at the meeting last week, the commerce ministry represented that it has suggested to the US that if they were agreeable for discussion on multi-sectoral mutual recognition agreement (MRA) including ICT, food, pharmaceutical, etc, India will take the discussion forward, one of the sources cited above told The Indian Express. However, the source added, that US had expressed its unwillingness to this proposal stating that its experience with MRAs was not positive. This was discussed in the context of the US demanding accredited laboratories located outside India being able to certify equipment to be used within India. India rejected this demand and pushed for multi-sectoral MRA.
MRAs eliminate the cost of retesting and re-certification, and shorten time-to-market for partner countries’ manufacturers and exporters. It also reduces technical barriers to trade by allowing equipment to be tested in the exporting country and accepted in the importing country with minimal further regulatory action.