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New USTR slams India's high tariffs, equalisation levy
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SME Times News Bureau | 05 Apr, 2021
The US Trade Representative (USTR) in its latest report on Foreign Trade
Barriers released on March 31 has highlighted major trade barriers to
American exports, FDI and e-commerce.
This report has been issued
by Joe Biden Administration's newly appointed USTR, Katherine Tai who
replaced Ambassador Robert Lighthizer after Donald Trump lost the
election last year. It has found India's trade policies discriminatory
which creates both tariff and non tariff-barriers and poses a threat to
US trade and imports to India. Trade barriers include government laws,
regulations and policies. Duties, according to the report, have
been increased across two large groups: Labour-intensive products and
electronics and communication devices, such as cell phones, televisions,
and related parts and components. Earlier in January 2021,
USTR had found India's Equalisation Levy as discriminatory and
unreasonable,creating significant new tax burden for the US companies
and/or restricting US commerce -- forcing them to undertake costly
compliance measures. Finance Ministry issued clarifications in
February 2021, but the matter, instead of improving, has become much
worse. US companies across the board have complained that the latest
interpretation means that even merchandise trade will be subject to
Equalisation Levy. The new interpretation is increasing nervousness and
fear of tax terrorism, due to retrospective impact of such levy, even
further. According to the report, the United States' trade
deficit with India in 2020 was up 1.7 per cent to $23.8 billion, exports
down 20.1 per cent to $27.4 billion, and India's imports down 11.3 per
cent to $51.2 billion, from last year. The report highlights that the US
exporters continue to encounter significant tariff and non-tariff
barriers. Additionally, there exists large disparities between WTO bound
rates and India's MFN applied rates -- currently the highest in the
world at 17.6 per cent. In addition, the report also highlights
the unpredictability and opaqueness that plagues India's tariff regime
and how it poses major challenges to the US trade to India. As per the
report, the Indian Government used the last two Union Budgets to
increase tariffs on approximately 70 product categories, including key
US exports, without warning or public consultation. The report
also places a major focus on barriers to Digital Trade. From
wide-ranging data localisation requirements across sectors and policies
like the Personal Data Protection Bill, 2019, RBI localisation
guidelines, yet-to-be released e-commerce policy to the much discussed
Equalisation Levy, the USTR claims that these digital barriers will
impede foreign trade and increase the risk of retaliation from other
countries, putting interests of Indian companies at risk. Commerce
Minister Piyush Goyal has made every attempt to negotiate a trade deal
with previous USTR Lighthizer since September 2019, but without success.
Fresh tariff hikes, equalisation levy and the recently notified IT
Rules highlighted in the report, will further queer the pitch for a
trade negotiation with the new USTR Katherine Tai, with whom Goyal has
already held an introductory meeting two weeks ago. As per the
USTR, the recently notified IT Rules "incentivize overly restrictive
approaches to policing non-IP user-generated content and will undermine
many Internet-based platform services."
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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