China last week expressed its “deep concern” over the recent foreign direct investment (FDI) policy changes initiated by Modi government, alleging that it curbs takeovers and acquisitions of Indian companies. In April, India had decided to review every FDI proposal from a neighbouring country, a move that was targeted at Chinese investment in India. The statement came during India’s trade policy review at the World Trade Organisation, where the US and the European Union flagged trade barriers, especially recent increase in import duties, as key concerns, sources said. The US pointed out that since India’s last trade policy review in 2015, simple average tariff had increased from 13.5% to 17.6%.
This trend will not facilitate India's further integration into global supply chains, the US has pointed out, according to sources familiar with the three-day review. Washington opted to use the platform to call for foreign participation in retail, e-commerce and insurance, while also seeking dismantling of “unjustified product standards”. It also asked the government to reconsider the agricultural support programme -+ already a major political headache for the Centre battling farmers at the Delhi borders – arguing that it disrupts domestic and world market prices.
Commerce secretary Anup Wadhawan, however, countered it saying that food security remained a challenge for India and the Covid-19 pandemic had reinforced the importance of its public stockholding programmes. India has been coming under attack for the minimum support price offered to farmers, which has also helped procure large quantities of wheat and rice, usually much higher than the buffer norms.
On its part, the EU delegation said it was concerned about the continued trend of new barriers to trade, which, it believes, have been amplified due to the Covid-19 crisis. The EU mentioned high customs duties, unpredictable trade procedures, cumbersome product standards, gaps in intellectual property rights protection, and narrowing access to government procurement, sources added.
