Intervention by Barack Obama, Narendra Modi helped in WTO breakthrough: Michael Froman

NEW DELHI: The US is “cautiously optimistic” about India and the “mantra of chalen saath saath” will guide trade and investment relations between the two countries, US Trade Representative Michael Froman said. He attributed the “breakthrough in the WTO” to the personal intervention by Prime Minister Narendra Modi and President Barack Obama and pitched the trade facilitation agreement as ‘win-win’ for all.

Speaking at a function organised by the Federation of Indian Chambers of Commerce and Industry, Froman said there was potential for further liberalisation and structural reforms and sought progress on issues related to intellectual property rights.

In India for the bilateral trade and investment dialogue, Froman said that though there are positive signs such as project approvals and liberalisation of the foreign direct investment regime, certain tariffs had been increased.

“So we are optimistic but we are cautiously optimistic. There remains great potential for further liberalisation, structural reform and the facilitation of business,” he said. India opened FDI up to 49% in defence and as much as 100% in railways and is doing away with cumbersome licensing procedures to improve the environment for doing business in the country.

Froman will co-chair the first bilateral India-US trade policy forum in four years with Commerce and Industry Minister Nirmala Sitharaman on Tuesday, highlighting the rapidly improving relationship between the two countries. “This pace of engagement is impressive, but shouldn’t be surprising for what President Obama declared the defining partnership of the 21st century. Our task is to build on our mutual interests, with mutual respect, and deliver on the promise of that partnership,” he said.

On India’s efforts to become a manufacturing hub, Froman said there was a need to improve the business environment and address issues related to the ease of doing business. “A number of studies have demonstrated that issues like “rigid” local content requirements in India may impact competitiveness of industries and push costs of producers and consumers and lower India’s economic welfare,” Froman said.

The US had dragged India to the WTO earlier this year over a requirement of local content in the first and second phases of the National Solar Mission, which it alleged discriminated against US producers of solar cells and modules. Froman noted that the most important factor determining the evolution of bilateral economic ties was the quality of the business environment based on transparency, consistency and predictability.