The United States Trade Representative has said India poses several entry barriers and foreign investment restrictions for US companies planning to foray into legal, accounting, architecture, construction, engineering, and express delivery services.

It has also pointed out that Press Note 18, which bars foreign investors from setting up new ventures without the consent of their former Indian partner, is a major impediment to investment in the country.

The report on 'Foreign Trade Barriers' for 2002 dealing with India, has also cited fertiliser subsidies, discretionary Customs procedures, testing and labeling requirements, and government procurement policies as bottlenecks for US companies setting up shops here.

"Trade liberalisation has not eased some of the most onerous aspects of Customs valuation. Documentation requirements are extensive and delays are frequent. Customs procedures are delayed due to complex tariff structures and multiplicity of exemptions, which may vary according to the product, the user, or a specific export promotion programme," the report said.

The report termed the exemption to Indian exports from payment of income tax as an export subsidy and called for further reduction of basic Customs duty and removal of the central value-added tax (cenvat) and countervailing duties.

"Numerous trade barriers still exist, and India remains one of the most heavily protected textiles market in the world," it added.

The United States Trade Representative also said some government entities were using foreign bids to pressurise Indian companies to lower their prices or resubmit tenders when a foreign contractor had offered lower bids.

The report is particularly critical of the entry requirements for companies and says: "Foreign industries have expressed concern with the Indian government's stringent and non-transparent regulations and procedures governing local shareholding.

"Price control regulations have undermined the incentives to increase equity holdings in local firms. Some companies report forced renegotiation of contracts in the power sector to accommodate government changes at the state and central levels."

On 'services barriers', the report has dealt with eight sectors and pointed to the restriction in most of them. In banking, for instance, it said foreign banks operated under restrictive conditions, including strong limitations on adding sub-branches.

"Operating ratios are determined on the foreign branch's local capital instead of the global capital of the parent institution," it added.

On the motion pictures sector, the US trade body has voiced its opinion against pre-censorship quality check procedures and fees, restrictions on import of audio-visual publicity material, and change in valuation norms that result in double taxation of screening profits.

The report has welcomed the liberalisation of the telecommunications sector, but has cited revenue-sharing formula and policy uncertainties as factors impeding investment.

It also said the policy of price controls on specified drugs was an issue of concern to US companies.

The report also pointed out that the policy on counter-trade was biased against foreign companies, and global tenders usually included a clause stating that preference would be given to companies willing to counter-trade.