United States raises concerns over local content requirement in India

NEW DELHI: The United States today raised concerns over stipulation for local sourcing in tenders in some sectors in India, saying such a requirement will be counter productive in attracting investment.

As part of its Make in India drive, the government has mandated in some sectors the stipulation of sourcing a certain percentage of goods and services locally.

The US had dragged India to WTO over provision of domestic content requirement in India's solar power programme.

Latest to join the local content list is oil and gas sector where international companies will have to source up to 50 per cent of rigs and pipes, among other things, locally for PSU tenders.

"Local content requirement is something that we have faced in other countries as well... We strongly believe (from) our experience from around the world, (that) local content requirement will be seen like they drive the business (but) end up actually being counter productive in the long term in attracting investment and getting companies to come to the business," US Deputy Secretary of Commerce Bruce H Andrews said.

Andrews, who is leading a delegation of 18 US companies on a Smart Cities Infrastructure Business Development Mission, said the US has spoken about its "concerns" over local content.

"The more open your market is, actually the more you are going to attract investment and more willing the companies are going to come to do business here," he told reporters.

The requirement of sourcing a certain percentage of goods and services from local suppliers will keep "the best and most efficient technology out of the market," he said, adding that opening up to international competition gets the best technology.

Reducing competition by artificial trade impediments does not serve the day and enhance innovations, he added.

Asking about impediments, Andrews said the US and India have "very good relationship" and are "very focused on solving the problems together."

"Clearly there are issues, but the Indian government is involved in very open and frank discussion. That's very important that the governments work together.

"There are issues like streamlining of process and ease of doing businesses and local content requirement. We value dialogue and efforts to work collaboratively to address these issues," he said.

The US, he said, is in discussions with India on building an innovation based ecosystem.

"We are talking to the Indian government, I see their commitment in building an innovative ecosystem whether it's entrepreneurship, whether it's helping businesses, whether it's attracting investment."