USIBC Newsletter (January 30, 2020)
Message from the President
I hope all of our readers in India enjoyed a happy Republic Day! The year has gotten off to an eventful start, with the countdown on for India’s budget announcement and DefExpo 2020, movement towards conclusion of the long-anticipated U.S.-India trade agreement, and preparations underway for the first U.S. Presidential visit to India in five years. Amid all of this activity, incoming Ambassador of India to the United States Taranjit Sandhu will have to hit the ground running as he joins the Embassy in February.
On Saturday, India’s stock markets will remain open an extra day as industry eagerly awaits Finance Minister Nirmala Sitharaman’s announcement of the 2020-2021 Union Budget. This is the first full-year budget of Prime Minister Modi’s second term, and will be an opportunity for the PM to lay out a growth-focused economic agenda. The budget announcement comes at a critical time for India, with growth projected at just 4.8% for the current fiscal year and a likely shortfall in tax revenue.
While economists widely predict a stronger market in 2020 – supported by corporate tax cuts announced by FM Sitharaman in September – industry will be looking for new policy initiatives designed to support struggling sectors and kick-start consumer spending. Chief among these is a widely anticipated personal tax cut. India may also raise import duties on $56 billion worth of inputs to support domestic manufacturers, following a recommendation by trade and finance ministry officials. Based on conversations with our members, USIBC submitted over thirty pages of budget recommendations and will be watching closely to see which – if any – are included in this year’s budget. You can check out some of our top recommendations on our Twitter feed or in the text below. Members are also invited to join our Budget readout call on February 1.
On the U.S. side, officials are gearing up for President Trump’s first visit to New Delhi in late February. Following extensive conversations around energy during Prime Minister Modi’s Houston trip in September and recent comments by Minister of Petroleum & Natural Gas Dharmendra Pradhan, we’re expecting to see conversations on energy, including oil and gas, as one focal point of the trip. With the intersection of energy and sustainability a key topic at last week’s World Economic Forum (WEF) and spiking global oil prices in the wake of the coronavirus’ spread, India’s energy future will no doubt be top-of-mind going into the trip.
The President’s projected visit has also accelerated conversations around a limited U.S.-India trade deal. After more than a year of negotiations, both U.S. and Indian officials are signaling that an agreement is nearing conclusion, and U.S. Trade Representative Lighthizer may head to India to finalize a package as early as next week. In exchange for a restoration of India’s benefits under the Generalized System of Preferences (GSP) program – valued at roughly $6.3 billion in 2018 – the deal is likely to include greater market access for U.S. agricultural goods, medical devices and motorcycles. It remains unlikely that ICT tariffs, a particular point of interest for U.S. industry, will be addressed in the deal.
Bilateral trade will get the spotlight at next week’s DefExpo 2020 as well, with U.S.-India defense ties at an all-time high as the defense trade relationship hit $18 billion last year. Co-led by Boeing and Lockheed Martin, the delegation will meet with high-level Indian defense officials and host a session focused on the U.S. defense industry’s contributions to ‘Make in India.’ I look forward to seeing many of our members at DefExpo and during my travel to India over the next few weeks.
January 29: USIBC announces the Executive Delegation to DefExpo 2020 (Press Release)
The U.S.-India Business Council (USIBC) will lead its 17th Defense Executive Mission to DefExpo 2020 (February 5-8), showcasing the continuing vibrance and importance of the U.S.-India defense partnership. The mission will be co-led by Dennis Swanson, Vice President, International Sales, Global Sales and Marketing, and Defense, Space & Security, Boeing Global Services and David Sutton, Director for the Indo-Pacific, Lockheed Martin International. It follows a successful U.S.-India 2+2 Ministerial Dialogue, which featured the signing of defense agreements including the Industrial Security Annex (ISA).
Jan 16: USIBC announces five additions to the 2020 Global Board of Directors (Press Release)
– Amit Kalyani, Deputy Managing Director, Bharat Forge
– Ashu Kullar, CEO, Citi India
– C. Vijayakumar, President and CEO, HCL
– Magesvaran Suranjan, President, Asia Pacific, Middle East and Africa, Procter & Gamble
– David Neenan, President for International, TransUnion
ADVOCACY & EVENTS
Note: The points below are just a small sampling of the recommendations USIBC submitted to the Ministry of Finance in January. Altogether, our submission reached over thirty pages of text, and touched every industry sector we cover at USIBC: Aerospace & Defense; Banking, Private Equity & Digital Payments; Digital Economy; Energy & Environment; Food, Agriculture & Retail; Infrastructure; Legal & Professional Services; Life Sciences; Manufacturing; Media & Entertainment; Supply Chain Logistics; and Tax, Insurance & Real Estate.
- 100% allowance of foreign direct investment (FDI) in the insurance sector. This will improve insurance coverage and help develop a robust ecosystem on par with global markets. Allowing more FDI in the insurance sector will also have a positive impact on jobs, investment and skilling opportunities for Indian citizens.
- Streamline tax filing by automating first-line GST and transfer pricing reviews. A simplified system would improve the tax system’s consistency and transparency, helping to attract new investment and support India’s digital transformation.
- Remove GST on telecom sector license fees and spectrum use charges. Lower costs would support one of India’s struggling sectors and free up the resources needed to invest in next-general connectivity technology and service improvements, as well as expand coverage to India’s rural areas.
- Reduce tariffs on Information and Communications Technology (ICT) products. Lower ICT tariffs will support India’s competitiveness and leadership in digital technology manufacturing and help to attract companies moving supply chains out of China.
- Open India’s satellite communications market to foreign investment. New FDI flows will help India to achieve nation-wide connectivity and high-speed internet access, major contributors to future economic growth.
- Remove price controls in the media & entertainment sectors. Ensuring a competitive market will promote sector growth and encourage the production of innovative content and services.
- Exempt lifesaving medical drugs and devices from GST, and lower GST rates for medical products across the board. Rationalizing GST for medical devices will reduce disputes and uncertainty in the life sciences industry and support affordable healthcare access for all Indians.
- Extend the tax holiday benefit to manufacturers who begin production by March 2025. This will support Make in India efforts and help attract manufacturing supply chains, a key part of India’s export-led growth strategy.
- Eliminate the export limit for goods shipped in courier mode. This will boost India’s exports, increase its competitive advantage as a manufacturing hub and lower costs for small businesses.
The U.S.-India Business Council is pleased to support the Asian Legal Business India In-House Legal Summit 2020, which will convene business and legal professionals for conversations on recent regulatory developments, pressing legal and compliance issues, and best practice solutions in India and across the region.
January 16 – FTC Commissioner Wilson Debrief on Privacy, Competition, and Consumer Protection
As part of the USIBC Privacy Working Group (PWG), we hosted our first conference call of the year with FTC Commissioner Christine S. Wilson for a debrief on her recent trip to India. Commissioner Wilson spoke about her meetings with the Competition Commission of India (CCI) and her thoughts on the Personal Data Protection Bill (PDPB). She discussed getting India involved in international privacy-focused groupings and stressed the need to focus on innovation and risk-based approaches. Looking ahead, the FTC hopes to amplify its engagement with India through fellowships and official visits, among other points of contact.
- India as an investment destination, R&D and investment collaboration, and the future of the U.S.-India commercial partnership: An interview with Nisha Biswal (Invest India Magazine, January 28)
- DefExpo 2020 & the U.S.-India Defense Partnership
- “Defence sector the engine of growth in overall India-US ties: USIBC chief” (Business Standard/PTI, January 28)
- USIBC DefExpo Mission Co-Lead Dennis Swanson on India as a growth market: “Boeing says India is critical to its international growth plans” (Outlook India, January 28)
- “Extraordinary Growth Potential in U.S.-India Defence Trade: Boeing Official” (Economic Times/PTI, January 28)
- USIBC President Nisha Biswal on Amb Sandhu’s capacity to discover ‘unexpected opportunity.’ “Many Challenges Await Taranjit Singh Sandhu, India’s New Ambassador to the US” (The Wire, January 25)
- “Key Global Takeaways From India’s Revised Personal Data Protection Bill” (Lawfare, January 23)
- Board of Directors Announcement: “HCL Chief Vijayakumar, Other Sr Executives Join USIBC” (Economic Times/PTI, January 23)
USIBC Budget Webinar with Dhruva Advisors
USIBC DefExpo Mission
Launch of U.S. Chamber of Commerce International IP Index
An annual assessment of intellectual property (IP) environments of 50 world economies
Read the 2019 Report
Roundtable with the Competition Comission of India (CCI)
Presented by USBIC and Khaitan & Co.
Silicon Valley, CA
USIBC Board of Directors & Supply Chain Mission
New Delhi, Chennai