Modi govt slow in implementing key reforms like GST: US official


The Narendra Modi government has not moved as fast as expected to implement long-awaited reforms like the GST and Land Acquisition Bill, a senior US trade official said and asked American businesses to be patient since reforms cannot be implemented overnight.

“US businesses still find it difficult to do business in India due to an inconsistent regulatory environment, systemic infrastructure bottlenecks, lack of transparency and uncertainty in corporate governance rules,” Arun Kumar, Assistant Secretary for Global Markets in the US Department of Commerce, International Trade Administration, said in New York.

“We consistently dialogue with the Indian government on these subjects,” he said, adding that US’ trade and investment with India will also greatly depend on the Government of India’s efforts to strengthen the local business climate.

Kumar, in his keynote address to a session on India-US relations and impact of the Indian Budget 2016 jointly organised by the Asia Society, KPMG and US-India Business Council, said Intellectual Property Rights protection is another key concern for US businesses that will need to be addressed to prompt greater foreign investment.

He said that US companies are looking to India to “approve and implement long-awaited reforms” including the Goods and Services Tax (GST), the Land Acquisition Bill and the Bankruptcy Law that would considerably lower the burden of doing business.

“The Modi government is well aware of the hurdles and while it may not be moving as fast as some would like, it has taken a number of initial positive steps,” he said, citing the “real progress” made by India on complex tax issues, reducing the backlog of transfer pricing cases and easing foreign investment restrictions in the defence and railways sector.

He said India has also shown an “initial willingness” to address long standing agricultural concerns.

He pointed out that US businesses have to be patient since reforms cannot be implemented overnight and given the vast growth opportunities in India, it is important that US businesses do not lose faith but hold on to the Indian economic growth story.

“For our part, we will need to show continuing patience, perseverance and understanding and also be creative in our problem solving as we know from our own national experience that implementing reforms in a vibrant democracy is complicated and does not happen overnight but make no mistake India’s vast untapped opportunity makes staying the course a commercial imperative,” Kumar added.

He, however, noted that high tariffs on inputs and procurement and other policies that favour domestic sourcing have historically complicated India’s integration in the global supply chains and its ability to increase exports.

In this context, Kumar said a “welcome feature” of the new budget is the reduction of duties on imports of parts and components.


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