Now, US asks India to free market for ICT products

Hot on the pursuit of the World Trade Organisation's trade facilitation agreement, the United States now wants India to lift all import duties on information and communication technology (ICT) products and open up a market for ICT products worth about $1 billion.

Lifting of custom duties in India will help US electronic hardware manufacturers enter the supply chain for ICT products in India, deputy US trade representative (USTR) Robert Holleyman said.

''We are also asking India to eliminate customs duties on ICT products. This will help introduction of these products into the supply chain operations…. We are working with India on the implementation of the trade facilitation agreement (at the World Trade Organization) to ensure a free flow of ICT products with customs,'' Holleyman said at an event organised by New Delhi-based Observer Research Foundation.

India's domestic market for ICT products is worth about $65 billion, while the global market in such products stands at a staggering $2 trillion, he said, adding that India should work fast towards tapping its vast untapped potential of the ICT segment.

Finance minister had in his budget proposals for the 2016-17 fiscal, had proposed to levy import duties on chargers, adapters, batteries, wired headsets and speakers, taking the cumulative tax incidence (including basic customs duty of 10 per cent, countervailing duty of 12.5 per cent and special additional duty of 4 per cent) on these products to over 29 per cent. while keeping a 1 per cent excise duty on domestic manufacturing (assembling).

However, the government later partially rolled back the impost following industry protest, saying importers of mobile handset components would need to pay only the CVD of 12.5 per cent.

Finished handsets, however, attract only the CVD of 12.5 per cent, with 30 per cent abatement. The reason behind the move was said to be that fact despite concessions, core manufacturing activities to India by foreign players didn't shift.

Holleyman said top officials of both the countries will hold strategic and commercial dialogue in New Delhi at the end of next month.

Both the countries held the first composite 'strategic and commercial dialogue' in September last year, with an aim to increase annual bilateral trade to $500 billion.

Merchandise trade between India and the US touched $62 billion in the last fiscal.

The deputy trade representative held that the US would like to work with India in removing localisation policies, as many of the major IT firms have established research and development initiatives in India and those would like to have free flow of data across borders.

The US move comes after it won a ruling against India at the WTO on the rules of origin of solar cells and solar modules used in India's national solar power programme. India, however, has challenged that ruling.