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Protectionism can hurt Indo-US ties: Ficci

By Lalit K Jha in Washington
June 23, 2009 13:47 IST
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The Federation of Indian Chambers of Commerce and Industry has warned that contentious trade and taxation issues, if not addressed appropriately by the Obama Administration, could 'damage' Indo-US ties.

Ficci is also concerned that outsourcing, relaxation of export-controls on dual-use technology are other issues that can 'hinder' the burgeoning relationship.

"We are deeply concerned that there are serious trade issues that can damage our relationship," Ficci general secretary, Amit Mitra, told PTI in a joint interview with president Harsh Pati Singhania.

Singhania and Mitra are leading a Ficci delegation which would meet top officials of the Obama Administration, powerful lawmakers and influential think-tanks to appraise them about the issues related to Indo-US trade and business relationship.

"There are issues like GSP (generalised system of preferences) which are going to end soon," said  Singhania.

GSP is a programme designed to promote economic growth in the developing world by providing preferential duty-free entry for about 4,800 products from 131 designated beneficiary countries and territories. The GSP would expire in July, and there is a thinking in the US that they may not be renewed.

"The United States believes that India does not need it any more. We believe this is not correct," Singhania said.

A large number of jobs in India's textile sector would be lost if GSP for India ends.

Gems and Jewellery sector along with the steel too would be badly hit.

About the general belief in the US that outsourcing has helped India, Singhania said studies have shown that it is actually the US companies who have gained the most out of the outsourcing. "In terms of value, more than 70 to 75 per cent of the benefit goes to US companies."

Both Mitra and Singhania said the Ficci delegation would be presenting the Indian case and impress on the importance of stopping protectionist tendencies.

"Then there is serious issue of taxation and outsourcing. On the one hand we are signing the civilian nuclear agreement, on the other hand there is a serious issue of dual use technology relaxation.,"

"So Ficci is going to convincingly present the case of Indian business that these kinds of measures, weather it is taxation measures for outsourcing, sun setting GSP for India is not right," Mitra said.

During the week-long visit, Ficci would be releasing two reports -- one  on innovation as a driver in Indo-US relations and another on India's contribution to employment, capital growth and tax revenues in the US.

Mitra said the trip would take a long-term view and be mindful of areas of potential conflict. "One focus is to push the frontier of innovation as partnership between the two countries. Because that's where we think, big business lies on a sustainable basis."

In the latter half of the week, the delegation would be joined by some young members of the parliament.

In their meetings, they would articulate the Indian viewpoint.

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Lalit K Jha in Washington
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