Foreword by Nisha Biswal, President of the U.S.-India Business Council and Senior Vice President for South Asia at the U.S. Chamber of Commerce.
The fast evolving and moving United States – India partnership is founded on common set of values, robust democratic systems, and on deep cultures of entrepreneurship. Our countries also enjoy longstanding people- to-people ties that make them natural strategic partners. As leaders around the globe reassess their approach to global trade and investment and recover from disrupted supply chains, both nations have the capacity to catalyse areas of growth to achieve the shared goal of US$ 500 billion in two-way trade. This will require a strategic look at market-based reforms, deeper cooperation in research and development and a dynamic assessment of key sectors that need a targeted boost within the bilateral economic relationship.
Though the trade trajectory has been positive, there is still significant untapped potential in the U.S-India commercial relationship. Trade between our two countries reached nearly $150 billion in 2019, but the maximum potential can be reached by fostering a deeper connect between small and medium businesses at
the state and local level of both the countries. As part of the U.S. Chamber of Commerce, USIBC is linked to a network of thousands of state, city, and metro chambers of commerce and will continue to leverage its networks for delivering value to its members and the larger business community across states and cities in both countries. USIBC is committed to supporting American businesses make their first forays into India and be a critical leader to increase bilateral trade and investment.
I congratulate Nishith Desai Associates and Sannam S4 for taking the initiative to author the “Doing Business in India” report. Investment guides like the“Doing Business in India”are excellent resources for businesses that are evaluating India as a viable option and are critical towards the achievement of the $500 billion goal in two-way trade.
During 2020, the Government of India (GOI or Government) is to be commended for its decisive and comprehensive actions in response to the COVID-19 pandemic. As a result of these continued efforts, India has been successful in avoiding the worst of the devastating toll that the virus is imposing on the health and economies of so many nations. The Government has also implemented a series of reforms to support the Indian economy and its citizens through the negative impact of the health measures implemented to contain the virus. While these measures have enabled many companies, both large and small (and the workers that depend on them), to survive the economic downturn and remain viable entities, an aggressive path for reform is required to reverse the economic downturn and power the Indian economy’s return to its full strength as a regional and global powerhouse. As a result, India’s Union Budget for 2021-2022 takes on even greater importance as policymakers deliberate on the particular calculus required to promote investment, reinvigorate all industry sectors – both the hardest hit due to the pandemic as well as the fastest-growing – protect and create new jobs, and move aggressively towards a long-term strategy for growth. USIBC and its members share the Government’s goals for economic growth for all sectors of the Indian economy and for all its citizens. Member companies remain committed to their investment in India as well as the health and safety of their workers. They seek to work in collaboration to realize the shared vision of a vibrant and growing Indian economy.
USIBC provides the following recommendations in partnership with Ernst & Young (EY) for the GOI’s consideration as its submission for India’s Union Budget 2021-2022. Part A outlines broader reforms to drive growth in the Indian economy. Part B outlines specific recommendations that impact the operational health, and therefore the potential for growth, of U.S. companies operating in India. Part B has three parts: Section I outlines recommendations for building a fair and transparent taxation, Section II provides sector-specific taxation to encourage investment and economic growth, and Section III provides detailed recommendations for foreign direct investment (FDI) policy. Click here to access the full report.
The USIBC published recommendations to encourage U.S and Indian Governments to deepen their defense and strategic relationship while being more inclusive of the defense industry in both countries.
The following recommendations are offered to urge the U.S. and India to advance the defense relationship:
Further, the paper underscores that deeper integration between the U.S. and Indian defense industrial base will strengthen the overall U.S.-India commercial and strategic relationship. Industry has an important role to play in defense cooperation, which is essential to achieving the shared goal of maintaining a prosperous and secure Indo-Pacific region.
This work was supported by the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, International Program under Contract No. DE-AC02-05CH11231.
India launched the Energy Conservation Building Code (ECBC) in 2007, and a revised version in 2017 as ambitious first steps towards promoting energy efficiency in the building sector. Pioneering early adopters-—building owners, architecture and engineering firms, and energy consultants—have taken the lead to design customized solutions for their energy-efficient buildings. Building Innovation- A Guide for High-Performance Energy Efficient Buildings in India offers a synthesizing framework, critical lessons, and guidance to meet and exceed ECBC. Its whole-building lifecycle assurance framework provides a user-friendly methodology to achieve high performance in terms of energy, environmental, and societal benefits. Offices are selected as a target typology, being a high-growth sector, with significant opportunities for energy savings. The best practices may be extrapolated to other commercial building sectors, as well as extended to other regions beyond India with similar cultural, climatic, construction, and developmental contexts.
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On March 8, 2019, the U.S.-India Business Council submitted comments in response to India’s Draft National e-Commerce Policy. You can read the content of the letter to Department for Promotion of Industry and Internal Trade Assistant Director Goonjan Kumar below, and read the annex with our detailed recommendations, organized by section.
USIBC Recommendations on India’s Draft National E-Commerce Policy
Dear Ms. Kumar,
The U.S. Chamber of Commerce’s U.S.-India Business Council (USIBC) writes to offer our comments on India’s Draft National E-Commerce Policy (Policy). As you may know, USIBC is an integral part of the U.S. Chamber of Commerce, the world’s largest business federation representing more than 3 million businesses of all sizes, sectors, and regions, as well as U.S. state and local chambers, and numerous industry association members. USIBC represents the largest of our 25 country- and regional-specific business councils, and we directly represent nearly 300 companies based in India, the United States and Europe.
Our membership includes entrepreneurial, small, medium and large corporations from across sectors highly critical to the digital economy, life sciences, logistics, and the media industry. Our membership includes India’s top 5 information technology companies as well as an innovative array of financial investors, global software, equipment, information technology (IT) services, telcos, e-commerce, social media, and sharing economy innovators, all of which are central to India’s digital transformation and strongly support the Digital India initiative, and related Make-in-India, Start-up India, and Smart Cities programs.
It’s also important to consider that our membership represents many of India’s leading investors – domestic and international – who generate billions of dollars in digital activity, employ hundreds of thousands of Indian employees, and drive much of the country’s digital innovation and exports. These companies are critical to, and supportive of India’s goal of developing a $1 trillion digital economy by 2025.
At the outset, USIBC would like to highlight that it is supportive of some of the e-commerce Policy’s proposals. In particular, we welcome the strong intellectual property-related provisions of the draft Policy, which effectively consolidate India’s existing regulations and underscore the importance of anti-counterfeiting and anti-piracy measures. India is taking steps in the right direction to combat the sale of counterfeit goods through online platforms (Section C). The U.S. Chamber’s 2019 International IP Index shows that economies with robust protections against online counterfeiting see significantly higher levels of international trademark applications, thereby boosting the global reach of local brands and facilitating e-commerce.
India also stands to gain by protecting the creative economy with robust anti-piracy provisions under Section D. The creative economy, protected by copyright, is a powerful source of economic growth, multiplying jobs and trade. Research from the U.S. Chamber’s Global Innovation Policy Center reveals that economies with strong copyright protection measures are 64 percent more likely to benefit from the growth in both volume and value of the dynamic content and media sectors.
We would like to note, however, that effective remedies for counterfeiting and piracy should be coupled with limited and appropriately conditioned liability safe harbors for intermediaries. We recommend further engagement to ensure these specific aspects of the draft are practical and implementable.
USIBC is also supportive of the e-commerce Policy’s proposals on customs reforms. Customs reforms around e-commerce are also welcome. For example, we applaud the GOI’s support in increasing the existing limit for exports in the courier mode above INR 25,000 to INR 5,000,000. We further support the GOI focus to fast track the implementation of electronic data interchange (EDI) at courier terminals to facilitate quicker and easier dispatch of export consignments. We also support the exclusion of business-to-business (B2B) data sent to India as part of a commercial contract as well as software and cloud computing services involving technology-related data flows. We further welcome the exclusion of intercompany data from the scope of the Policy.
With this in mind, the Draft National E-Commerce Policy represents a worrisome trend towards digital policies that clearly discriminate against international investors and companies, and undermine India’s global leadership in the digital economy, which currently represents some $150 billion in economic activity and millions of domestic jobs. As proposed, key sections of the draft e-commerce Policy would reduce foreign investment into India’s digital economy, undermine innovation and competition, and encourage digital protectionism globally that is antithetical to India’s successful IT and business process outsourcing (IT/BPO) sector.
The Policy as outlined represents a risk to India’s IT industry and its current global competitiveness. Data localization undercuts the very core of a global digital economy that has generated immense benefits for India and its people. Moreover, India undercuts its global digital leadership if it isolates its companies and consumers into a walled-off ecosystem that limits new entrants, raises costs, and reduces competition. By abetting digital protectionism, the GOI will be putting its substantial digital trade and services exports at risk of reduced market access in the future as some 80% of India’s digital outsourcing business, for example, is dependent on market access to the United States and Europe.
Regulations on cross-border flows of data should also account for significant positives around global data analytics required to process data to fight terrorism, financial crime including corruption, fraud, anti-money laundering, and tax evasion. In addition, effectively addressing the global threat of cyber security risks would also be inhibited without an approach to the sharing of data with both public and private sector. This data processing typically falls under a public interest exemption, the lack of which would undermine the Indian government’s ongoing efforts in these areas.
In addition, we believe strongly that all policies in India should treat domestic and foreign investment equally. National treatment is core to creating a welcoming investment environment, ensuring regulation actually meets its goals, and are part of India’s commitments to the World Trade Organization (WTO). We were surprised that the Policy continued to focus exclusively on regulation of foreign-invested e-commerce marketplaces, with no mention of similar regulations for domestic e-commerce companies. If the goal of regulating e-commerce marketplaces is, as stated, to promote fair competition and help small business thrive, then restrictions against holding inventory should apply to not only foreign-invested companies, but also large domestic companies, many of whom already have large physical store presence across the country. We strongly recommend the e-commerce Policy be amended to make regulations laid out in Press Note 2 of December 26, 2019 uniform across the e-commerce sector.
Finally, USIBC underscores that the current consultation period is too short, and does not allow for substantive input on the major changes being proposed by the Indian government to the digital sector. The Draft National E-Commerce Policy was released on February 23, 2019, with a March 9 deadline, a mere 9 business days to assess a complex and foundational Policy document. Government and industry best practice recommends 45-60 days to allow the necessary time to provide a meaningful response. Comments are typically followed by a counter-comment period, as well as a public open house or other mechanisms to engage the public. For a trade association such as ours, which aggregates feedback and comments from a range of stakeholders, each day in that period is critical. We believe our input is particularly helpful because we are consolidating many viewpoints and providing the government with a perspective broader than any individual company can offer. Thus, we requested, but have not received, a deadline extension. This short turn-around time is not isolated to the Draft National E-Commerce Policy, and the lack of transparency and predictability undermines the government’s strong efforts to improve the business and investment environment in the country.
Industry shares the goal of responsibly addressing the challenges faced by e-commerce platforms to protect privacy and promote economic development. But these goals must be balanced in a way that incentivizes investment and innovation, along with the ease-of-doing business and global trade. While there are elements of the draft e-commerce Policy that USIBC favors, overly nationalistic tone and misunderstanding the drivers of the digital economy are a concern unlike the positive proposals around intellectual property rights and customs reforms.
We look forward to ensuring that all actors work hand-in-hand for the prosperity, privacy and security of Indian citizens, and strongly believe that cooperation between private companies, policy makers, law enforcement and other competent authorities is the optimal way to develop sustainable policy and outcomes.
President, U.S.-India Business Council
U.S. Chamber of Commerce
The recent increase in cases of financial fraud, or their detection, has raised an important question – are India’s anti-fraud measures adequate to prevent or redress financial fraud? Be it manipulation of books of accounts, siphoning of funds, misstatements, money-laundering, or other unfair trade practices, financial fraud threatens businesses, investors, and the public alike. The current regulatory regime compels various stakeholders to needlessly assume investigative responsibilities and hence presents a case for a systemic change.
Controlling financial fraud is especially difficult due to its multifaceted nature. It spans across the regulatory domains of several agencies like SEBI, RBI, IRDAI, Enforcement Directorate, SFIO, among others, and synergies between the regulatory agencies remain largely unexplored. Changing technology has further complicated regulatory efforts. Scattered regulatory oversight makes it difficult for stakeholders to initiate regulatory action and inefficiencies often result in stakeholders settling for a compromise rather than fair and equitable solutions. Therefore, it has become essential to understand and further explore the preventive and remedial alternatives for all stakeholders.
Download the approach paper from the link below.