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US, India keen to boost trade ties: Juster

June 05, 2003 11:37 IST

The United States and India have been committed to enhancing cooperation in high technology trade, Kenneth Juster, US Under Secretary of Commerce, Bureau of Industry and Security, said in New York on Wednesday.

American export controls on dual-use items, which could find use in both military and civilian fields, are not impeding the development of high technology trade with India, he said.

Juster was delivering the keynote address, 'Stimulating High Technology Cooperation with India,' at the 28th annual meeting of the US India Business Council.

This is the first time the conference was held in New York City.

US controls do not 'meaningfully' restrict exports to India of products such as high performance computers, microprocessors or encryption software or affect key sectors of high technology such information technology, life sciences and nano-technology, he said.

The qualitative data shows that very few US exports to India were subject to licensing requirements. They are fairly circumscribed and generally apply only to items under multilateral regimes relating to nuclear, chemical and biological weapons and missile technology, he said.

Juster said in fiscal year 2002 -- from Oct. 1, 2001 to Sept 30, 2002 -- US exports to India that were subject to licensing requirement totalled only $38 million or about one per cent of the total trade and license denials were worth only $11 million. The data for the first half of 2003 also shows the similar trend.

"To truly transform US-Indian high-technology trade, our bilateral efforts must focus on all the issues. If our actions are limited only to dual-use export controls, we will make a political statement but we will not achieve full progress in overall trade relationship," he said.

One key development in the area of high technology trade has been the lifting of sanctions on India -- imposed after its 1998 nuclear tests -- in September 2001.

Early this year, Juster and Indian Foreign Secretary Kanwal Sibal signed a statement of principles for US-India high technology commerce. These principles are aimed at promoting bilateral high technology commerce.

Juster, who is responsible for the trade of sensitive goods such as high technology and cooperating with other countries on trade, said more needs to be done in the trade aspect of the Indo-American relationship given the level of cooperation in other areas.

From 1997 to 2001, he said, US exports to India were $3.8 billion, which grew to $ 4.1 billion in 2002. India still ranks 27th ,  behind countries such as Ireland and the Jamaican Republic.

He said cooperating with India is in the commercial and strategic interests of the United States. Trade interests arise out of the high potential of India's middle class of over 200,000 consumers and the success of collaborations.

Juster said that liberalisation of US export controls is 'an important and meaningful' political objective of the Indian government but that alone is not sufficient to advance the bilateral high-technology trade.

He said Indian businessmen and US companies had, during their discussions with him on several occasions, identified issues which, despite reforms, were still 'problematic.'

Juster said he had emphasized to his Indian counterparts that advancing overall trade relationship would create the key constituencies within the business community that are critical to promoting change on the 'political dimension of high-tech commerce and ensuring a stable trading relationship.'

Putting the ball in India's court, he said private sector has identified high tariffs, lack of adequate infrastructure, absence of transparent government procurement processes, complex customs polices and procedures and excessive taxes as obstacles to a robust bilateral economic relationship.

He cited GE's John F Welch Technology Center in Bangalore which is fast becoming its global center for technology advancement, as well as Lucent's pioneering work in third-generation wireless technology.

On the strategic front, a strong, vibrant and open economy in India would have an impact on Asia and elsewhere, bring peace and stability and help combat global terrorism, he said.

The Indian government had identified high-technology trade as one of the 'trinity' of issues that include civil, nuclear and space cooperation, he said.

Dismissing the view that US exports controls are inhibiting high technology growth in India, Juster cited the example of the US-China trade relationship.

"United States maintains a more restricted exports control policy with China than it does for India," he said. "Nonetheless, US-China trade, including high technology trade, has thrived."

US exports to China in 2002 were over five times US exports to India.

He touched upon the problematic issues identified by private sector representatives in both countries. High tariffs, lack of adequate infrastructure, lack of effective international copyrights protection, absence of transparent government procurement procedures are some of the obstacles despite the recent reforms.

In his response at the luncheon address, Amit Mitra, secretary general of FICCI (Federation of Indian Chambers of Commerce and Industry), pointed at the progress made by India.

"Last year, US exports to India grew by nine percent," he said. This year, in the first quarter, they grew by 25 percent.

He said India has reduced tariffs by five percent annually, in accordance with ASEAN. India is also concerned about the customs procedures as it is a two-way process.

India may have a little bit of a difference on intellectual property, but they were sure they were on the right track. Parliament has just passed the IPR Act, he said. "Data exclusivity is your concern, and we are ready to discuss that."

Referring to the 'dog-eat-dog environment' in India, Mitra said it was perhaps the only place in the world where there was a basic telephone competition.

On the entertainment front, the world's largest animation company was in India, not in the United States; Gladiator was animated in Chennai; so was Spiderman. "It's a brave new world," he said.

In the R&D field, he pointed at the recent discovery of three molecules in India, of which two were being tested there and one in Norway. Two are about to happen this year. "We don't need the economy of scale in research & development high technology," he said. "I submit that the picture is extremely positive."

Earlier, FICCI expressed its concern over the backlash arising from business process outsourcing.

At the inaugural session, FICCI president A C Muthiah took up the "neo-protectionism" resulting from a sluggish US economy and job loss, leading to an attack on off-shore procurement and development of services. He termed it an "anti-thesis to globalization."

He said the proposed curbs on H1B and L1 visa would adversely affect the Indo-US interface achieved in the knowledge domain over the years.

Another of his concerns was regarding the withholding of GSP (generalized system of preference) on a large number of Indian products. India has made substantial progress on IPR (intellectual property rights) and caught up fully with its WTO commitments, he reiterated.

"If there are any minor hitches, FICCI is ready to take these up."

Additional inputs: PTI

Monika Joshi in New York