New Delhi: US Ambassador to India Eric Garcetti on Tuesday said “opaque” corporate tax practices in India continued to be an impediment to American companies that want to set up shop here, adding that foreign investment redirected from China was not flowing to India at a fast enough pace.
He batted for India’s “Atmanirbhar Bharat” or self-reliance policy but with a caveat: New Delhi should not view its self-reliance as a “fortress”.
Speaking at an event organised by the Indo-American Chamber of Commerce (IACC), the US Ambassador said: “Opaque corporate tax practices are still a barrier to too many (US) companies that want to be here.”
“Export control and policies have to change if India is going to achieve her goals… We have a $40 billion deficit with India and an even greater one with China. We want to see FDI (foreign direct investment) from China shift here… but FDI isn’t flowing into India at the pace that it should. Instead, it’s going to Southeast Asia in countries like Vietnam,” Garcetti added.
In 2022, the US’ goods and services trade deficit with India was $45.7 billion and a whopping $758.4 billion with China, according to data from the US government.
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Following the Covid-19 pandemic, corporates in the West began diversifying investment away from China, the world’s largest manufacturing hub.
But analysts say India is up against competition from China’s neighbours such as Japan and Vietnam that are offering firms incentives to pull out of China.
In a veiled reference to China, the US Ambassador also said India and the US need to work together to create international standards for technology and telecommunications.
“We have to decide these standards together. It’s exciting to see this happen — 4G, 5G open RAN Network. Can we define that in a way that’s very different from our main competitor in the world who wants to use telecommunications to spy on its citizens and also spy on others around the world,” he asked.
‘Want protections for intellectual property’
Speaking on the need to do away with “opaque” tax practices in India, the envoy said US companies wanted reassurance and protection for intellectual property.
“They want to invest but we have to make sure that there’s protection for intellectual property. Courts often decide that there’s been violations of intellectual property but then there’s no consequence. This is now increasingly important to Indian companies too because they are producing patents at a roaring rate,” he told the audience.
In May 2020, during the pandemic, Prime Minister Narendra Modi launched the “Atmanirbhar Bharat” scheme under the Ministry of Finance, Ministry of Defence, Ministry of Health, and Ministry of Electronics & IT. The aim was to reduce import reliance on third countries.
However, the US Ambassador warned against over-reliance on this thought process.
“We do want a self-reliant India but no country can be self-reliant anymore… The rhetoric that everything has to be made here in India will slow down the pace if you tax inputs. If you tax inputs, you tax your outputs. You’re not taxing us, you’re not protecting a market. What you’re doing is limiting a market,” he said.
(Edited by Tikli Basu)
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