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'India setting up barriers for US IT cos'

Last updated on: March 14, 2013 13:49 IST

ComputersIndia is setting up a steeplechase of barriers for American IT and high-tech firms by putting in place random new regulations and policies, representatives of US IT sector have told lawmakers.

"In spite of the opportunities that exist and the impact, the positive impact that open markets have had on the ground in India, the government of India seems to be doing a stutter- step on open markets and setting up a steeplechase of barriers to the success of foreign companies, especially American entities," Dean Garfield, President and CEO of the Information Technology Industry Council, said on Wednesday.

Testifying before a Congressional Committee, Garfield said examples are wide-ranging, from random new regulations to new testing and certification regimes to have access to the market at all.

India is one of the partners and participants in the Information Technology Agreement that was signed in 1996, but the world has changed tremendously since 1996, he added.

"None of us are carrying around mobile devices that we held back then, and yet and still, India seems resistant to updating that agreement and moving forward with a new ITA," Garfield said.

He said the most problematic of these is the preferential market access regime that's now in place in India, which essentially boils down to if it's not manufactured in India, then it cannot be merchandised there, which has the potential to foreclose that market to foreign players, including the US.

"As a result, over the last few years, we've started to see a decline in foreign-direct investment in India and is leading a lot of companies to question their ability to fully access the market, particularly since it's not just limited to government procurement, but includes private sector arrangements and deals between private entities," he said.

"India has suggested that the concern there is really focused on information security and protecting the security of the country, which we can empathise with, but the security of their products is not related to where it's made, it's related to how it's made and there are reasonable ways for addressing those security concerns that I think industry is well-prepared to address," Garfield said.

Though these issues are important for US relationship with India, they're, in fact, quite significant because of the potential contagion effect, he said.

Garfield said India is not the only market that's moving forward with these forced localisation requirements.

"We see the same sorts of developments, of course, in China, but we see them as well in Brazil and Argentina, in certain parts of Africa.

"So if we don't take steps now to deal with these challenges, they will continue to grow and will actually have real and meaningful impact on the ability of US-based industries and companies, particularly in the tech sector, to continue to grow," he added.

When US and the industry takes up the issue with New Delhi, he said, Indian officials argue that these are not directed at the US, but it's a broader concern about security and the security of India, which "we empathise with and we spend a lot of time talking to the Indian government".

"The policies they put in place they stand to lose their role as a part of that process," Garfield added.

"So our hope is that through these types of conversations they're able to see as well as we are how we mutually benefit from this relationship."

In his testimony he also discussed India's refusal to fully participate in a multilateral effort to expand the Information Technology Agreement.

Lalit K Jha in Washington
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