USIBC Newsletter (February 13, 2020)
Message from the President
Over the weekend, a phone call between Prime Minister Modi and President Trump confirmed dates for President Trump’s first official visit to India–February 24 and 25. Both leaders will have economic issues on the mind as the U.S. and India seek to conclude a much anticipated deal on a small package of trade issues.
The domestic economy also took center stage in both countries this month with the release of India’s 2020-2021 Union Budget and an official Budget proposal from the White House. In India, the revenue-focused Budget was greeted with muted enthusiasm by industry. While including some important policy tweaks, the proposals as a whole lacked a sweeping vision of economic reforms needed to jump-start India’s economy. Markets quickly steadied after a major stock market sell-off following the budget announcement, reflecting a largely practical budget centered on social welfare and development issues. Given the Modi administration’s tendency towards major announcements outside the annual Budget framework, it’s also possible that we’ll see more regulatory changes coming down the pipeline. In case you missed it, USIBC shared our thoughts on the Budget release through an extensive series of tweets and an official press statement, as well as several budget-focused engagements with members Dua Associates, Ernst & Young and Nishith Desai Associates.
In the United States, President Trump announced a record-breaking $4.8 trillion budget proposal for FY2021. While the budget does not include much focus on India and will look significantly different from the eventual version put up for a vote in Congress, it defines the administration’s priorities. Most notably, the proposal would increase spending on U.S. immigration and border protection and defense systems development, while reducing funding for U.S. foreign aid, environmental programs and major social safety net programs like Medicaid. On the trade front, the proposal includes significant cuts to economic development and trade adjustment assistance programs run through the U.S. Department of Commerce and U.S. Department of Labor.
The President’s budget also arrives on the heels of a more-positive-than-expected jobs report, a good indication that the U.S. economy will remain strong as the United States heads into election season. Despite the continued rise in India’s inflation rate, which prompted the Reserve Bank of India’s Monetary Policy Committee to hold interest rates steady earlier this month, economists broadly expect to see India’s economic growth rates rise by the end of this year. The wildcard?: the spread of coronavirus. While not prevalent in India, China’s centrality to global supply chains means that the India – and the rest of the world – will feel the effects of shuttered manufacturing plants and an estimated $280 billion hit to the global economy in the first three months of 2020.
With all of the activity in the U.S.-India corridor, it will be a busy month as negotiators try to wrap up a U.S.-India trade agreement and officials prepare for the President’s trip to New Delhi and Ahmedabad, featuring a Howdy Modi-style mega-event. While in India, President Trump is also expected to announce several deals, including new big-ticket defense purchases. As we prepare for President Trump’s visit, USIBC is also just weeks away from launching our 2020 Board of Directors delegation to India in early March. (Look out for some exciting Board additions in advance of the trip!)
ADVOCACY & EVENTS
January 31, 2020 – Automotive Working Group Launch Event
USIBC launched a new Automotive Working Group, which convened members in the motorcycle, passenger vehicle, and commercial vehicle sectors to identify areas for engagement with the U.S. and Indian governments. Alliance for Automotive Innovation Chief Policy Officer David Schwietert kicked off the session with a overview of the U.S. automotive sector,
which has faced a softening market as consumers opt for leases over ownership and increasingly rely on ride sharing services. Ola Electric Founder Anand Shah provided an update on India’s growing electric vehicle (EV) market and regulatory landscape, noting the reforms needed to make India’s auto industry more competitive globally. Discussion focused on core auto issues including connected cars, privacy, content and auto-IT, and built on discussions held during USIBC’s connected car delegation to the Indian Mobile Congress (IMC) last year. As a next step, the group will hold a similar launch event in India to refine the group’s advocacy agenda. Read our highlights from the launch event.
February 1, 2020 – Budget Webinar with Dhruva Advisors
USIBC and Dhruva Advisors hosted a conference call following the release of India’s Union Budget 2020-21 on February 1. CEO Dinesh Kanabar and Dhruva senior leaders provided a tax-focused overview and assessment of Budget proposals, covering changes to both direct and indirect taxes that will impact foreign companies and investors in India. The presentation focused on reforms eliminating the dividend distribution tax, updates to the international tax regime, particularly the Significant Economic Presence Test, a new 1% tax-deduced-at-source (TDS) on e-Commerce transactions, proposals to enhance tax compliance and dispute resolution schemes, and changes to the Goods and Services Tax (GST) and export customs. View the Dhruva Advisors Presentation: Union Budget 2020-21.
February 5, 2020 – U.S. Chamber International IP Index Launch
The U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) released its 8th annual International IP Index, which tracks progress on intellectual property rights (IPR) protections across 53 economies. After recording the largest gains of any country in the 2018 and 2019 editions, India continued its progress with a nearly 7% score increase in this year’s edition.
Both USIBC and GIPC congratulated India for significant work to create a stronger IPR regime, issuing a press release and a series of tweets, while recognizing that more work needs to be done to make India more attractive for investments in technologically cutting-edge, intellectual property (IP)-intensive industries. USIBC and the GIPC work closely to support India’s evolving IPR protection regime and foster sharing of global best practices between India and the United States. We are also planning an India launch of the IP Index in March, so stay tuned for details.
For information on USIBC’s work on IPR, please contact Jay Gullish.
February 6, 2020 – USIBC Privacy Working Group Call
In the Privacy Working Group’s first coordination call of 2020, the conversation provided a detailed update on U.S. privacy laws, which include 5 separate bills pending in Congress and 16 states that have passed or are considering state-level privacy laws. Jordan Crenshaw, CTEC, Chamber of Commerce provided a briefing focused on the ultimate goal of interoperable privacy regimes between the U.S. and India. On the Indian side, Trilegal Partner Nikhil Narendran, emphasized that the Joint Parliamentary Committee (JPC) is seeking industry comments by February 25. Most likely, the JPC will revise the current draft, along with further deliberations in the Monsoon Session of Parliament typically in October. Discussion centered on USIBC’s submission and the finalization of research by CUTS International. Looking ahead, USIBC will host the next International Privacy Forum on March 4-6 in New Delhi, with U.S. government and international participation.
February 6, 2020 –Immigration Working Group Call
In the first call of the year, the conversation focused on member interest in Senate Bill 386, and the new H1B Pre-registration process beginning in March 2020. Other topics included 3rd party definitions and proposals around H4 visas. USIBC will host a webinar on H-1Bs, registration and other issues and strategies on Feb 27. (Register)
To join the Immigration Working Group group, or for more information on USIBC’s immigration policy work, please contact Jay Gullish.
February 6, 2020 – Discussion of India’s Intermediary Guidelines with Trilegal
With the pending IT Act Intermediary Liability Guidelines likely to come out in several weeks, USIBC held a closed-door discussion with leading Trilegal digital lawyer Nikhil Narendran. The conversation provided background on intermediary liability in India, including a legal overview of laws and court rules. Discussion also focused on likely changes in the draft compared with the original proposal, given Indian media reports suggesting the new rules will focus on social media platforms. The government is currently obtaining a review from the Ministry of Law, and then will likely notify the guidelines, rather than opening an additional consultation. Once the final rules are notified, USIBC will host a follow-up conversation with Trilegal to assess the finalized guidelines (Read more: MeitY 2018 Notification; USIBC Submission)
For information on USIBC’s work on immigration policy, please contact Jay Gullish.
February 5-8, 2020 – DefExpo Delegation & USIBC Session on U.S. Industry & Make in India
USIBC led an Executive Mission to DefExpo 2020 for meetings with key officials from the Ministry of Defense and the governments of Uttar Pradesh, Andhra Pradesh and Tamil Nadu. Across the board, government officials assured delegation members that the government had heard and incorporated USIBC member recommendations on facilitating U.S.-India defense and aerospace collaboration. Sessions also focused on raising awareness around new opportunities for U.S.-India partnership, following the signing of the Industrial Security Annex (ISA) to the bilateral General Security of Military Information Agreement (GSOMIA) at the most recent U.S.-India 2+2 Ministerial Dialogue; India’s designation a Strategic Trade Authorisation-1 (STA-1) country; and the incorporation of industry players in defense co-development and co-production under the Defence Technology and Trade Initiative (DTTI) framework.
USIBC and the Ministry of Defence organised a session on the sidelines of DefExpo 2020, focused on the U.S. defense industry and ‘Make in India.’ Hon. Defense Minister Shri Rajnath Singh and Deputy Defense Minister Shri Shripad Yesso Naik delivered the program’s keynote remarks, with Minister Singh focusing on shared common values and principles in promoting global security, stability, and prosperity. Deputy Defense Minister Naik noted the bilateral defense relationship has progressed from an exclusively buyer-seller relationship to a partnership focused on co-production, co-development and technology collaboration. He highlighted that under Prime Minister Modi’s leadership, India is building a robust defense manufacturing base and U.S. companies will be important partners as India connects with the global aerospace and defense supply chain. The session also featured remarks from Andhra Pradesh Minister of Industry and Commerce Shri Mekapati Goutham Reddy; Boeing Vice President Dennis D. Swanson, Lockheed Martin Director for Asia Dave Sutton; BAE Systems Regional Director David Park; and U.S. Embassy OCD Capt. Dan Fillion. Read our full overview of the USIBC Delegation to DefExpo 2020 >>
February 11, 2020 – USIBC “MasterClass” on Privacy with Former National Cyber Security Coordinator Dr. Gulshan Rai
USIBC and Dua Associates co-hosted a member interaction on the Personal Data Protection Bill (PDPB) with Dr. Gulshan Rai, the Government of India’s former National Cyber Security Coordinator.
Approximately 15 members participated, including representatives from the digital economy, telecommunications and financial services sectors. Dr. Rai offered observations on how the Joint Parliamentary Committee (JPC) would conduct its review and reporting process. He encouraged USIBC and its members to take advantage of the opportunity to present to the Committee as a follow-up to written submissions. In a lively discussion, members noted concerns around the privacy bill, focusing on its vague language and seeking clarity on its terms. Dr. Rai suggested industry should push for a public debate of general principles to shape the regime’s implementation, limit the discretion of the Data Protection Authority (DPA) to subject its decisionmaking to due process and Parliamentary debate, highlight problems with the GPDR’s implementation and push for changes to the PDPB to address them. Based on the success of the event, USIBC is considering another session on the PDPB in the near future to connect members with JPC members and thought leaders.
For more information on the event or USIBC’s work around the PDPB on data privacy, please reach out to Aditya Vasishtha or Jay Gullish.
February 11, 2020 – India’s Post-Budget Economy with Economic Affairs Secretary Atanu Chakraborty
USIBC hosted a members-only roundtable with Atanu Chakrobarty, Secretary of Economic Affairs at the Ministry of Finance, to discuss India’s 2020 budget and facilitate a candid exchange of views on its impact on members.
Approximately 25 members participated, including senior representatives of companies from the financial services, digital economy, life sciences, energy and logistics sectors. EY sponsored the event and kicked off the session with a presentation by two EY Partners on the Indian economy and the budget, with a focus on personal and corporate tax issues. (View the EY Presentation)
Secretary Chakraborty framed the 2020 budget as setting the stage for the government’s next five years. He emphasized its focus on digital technology, investment promotion, governance, economic liberalization, and infrastructure, as well as caring for the disadvantaged and the environment. He praised the budget for its transparency and use of credible financial projections, noting the government’s desire to keep the fiscal deficit in check to avoid alienating international investors. The Secretary also drew attention to the budget’s efforts to increase farmers’ income by building connections to global value chains and praised its uses of catalytic financing modalities to promote advances in health care and education. He also acknowledged more work had to be done to promote debt financing from private sector sources, especially via alternative investment vehicles.
During the Q&A portion of the event, members raised topics including boosting infrastructure finance by changing rules applying to REITs and InvITs; promoting due process for logistics companies subject to license revocation proceedings; the negative impact of the medical equipment cess on product prices; the misapplication of the cess by customs officials to equipment inputs; efforts to increase India’s self-sufficiency in the production of active pharmaceutical ingredients; delaying the implementation of the 1% withholding requirement on ecommerce transactions; and India’s commitment to further liberalization and more open trade.
For more information on the event or USIBC’s engagement around the 2020-21 Union Budget, please reach out to Nileema Pargaonker or Sana Bagwan.
February 13, 2020 – Digital Proposals in the 2020-21 Budget with Nishith Desai Associates
USIBC’s Digital Economy Committee hosted a call on digital proposals in India’s 2020-21 Budget with a tax expert from Nishith Desai Associates. The presentation focused on the updated definition of “significant economic presence” which has been broadened, potentially raising tax exposure for some companies. While the section was poorly written and included unclear definitions, there are opportunities to engage on specific provisions as the rules are refined and implemented under existing tax treaties. Participants also noted that India’s position runs counter to aspects of emerging OECD digital taxation policy. The discussion also touched on the new e-commerce tax and a requirement that companies above 50 crore turnover allow digital payments, an effort to support digital payments and control black money.
The U.S. Chamber of Commerce is planning its first executive mission to Bangladesh on March 31 to April 1. The trip will convene U.S. company executives for a series of high-level government and industry meetings, including a potential engagement with Bangladesh Prime Minister Sheikh Hasina. The mission is limited to members of the U.S. Chamber’s Bangladesh Working Group, a platform for U.S. companies to identify areas for policy advocacy, engage with critical stakeholders and receive the updates on the U.S.-Bangladesh commercial relationship.
If your organization is interested in having a company executive join the U.S. Chamber’s business delegation or want to learn more about this mission, please reach out to Sid Mehra.
- USIBC President Nisha Biswal on opening India’s education sector: “Govt plans to ease rules on foreign investment in education sector” (LiveMint, February 10)
- India improves its score on the U.S. Chamber’s 2020 IP Index, reflecting growing investment in intellectual property-driven innovation: GIPC’s IP Index: India betters score, check the new ranking” (Financial Express, February 7)
- Nisha Biswal calls IPR protection a ‘good news story’ for India: “India gains ground with sustained momentum for intellectual property” (Economic Times, February 6)
- Defense Minister speaks at USIBC’s discussion on U.S. defence and Make in India:”Indo-US relationship will be collaborative: Union Minister Rajnath Singh at Defence Expo” (India Today, February 6)
- “India, US set for biggest defence collaboration, says Rajnath” (Tribune India, February 6)
- USIBC President Nisha Biswal on a larger FDI policy from the Government of India: “US industry hopeful of FDI relaxation in insurance” (The Hindu Business Line, February 3)
Reception for Ambassador of India to the United States Taranjit Sandhu
Indian Competition Law with Khaitan & Co
San Francisco, CA
USIBC Partner Event:
“Litertainment”: Discussions on Contractual Pitfalls
Los Angeles, CA
ALB India In-House Legal Summit 2020
New H1B Visa Registration
USIBC Global Board Delegation & Supply Chain Mission to India
New Delhi, Chennai
International Privacy Forum
USIBC Delegation to India Pharma 2020