New Delhi, April 18: India is getting ready for the mother of all trade spats — a confrontation with the US, which accounts for trade worth $70 billion annually, over pharma and telecom.
An urgent meeting has been convened next week by cabinet secretary Ajit Seth over Washington’s threat to punish India for violation of drug patents and alleged discrimination against Western telecom equipment.
In drugs, American multinationals have been lobbying their government to impose sanctions against India by labelling it Priority Foreign Country, a tag attached to the worst offenders of patent rights.
US and European telecom equipment manufacturers, on the other hand, are up in arms against India’s local sourcing and testing norms, which they fear could lead to more domestic devices replacing foreign products.
Seth’s meeting is likely to be attended by the foreign, commerce and industry secretaries, said officials.
Cheap drug debate
US actions against Indian pharma firms have already dented growth in one of the fastest growing export industries.
In the last financial year, pharma exports, till now growing 15 per cent annually, rose just 3 per cent in the first ten months.
In 2012-13, India had earned $14.6 billion from pharma exports.
The US Chamber of Commerce, backed by the US Pharmaceutical Research and Manufacturers of America, had in February called on Washington to label India as Priority Foreign Country.
The only country on the list is Ukraine. The classification will result in sanctions on Indian exports.
Indian pharma industry believes the real cause of the US ire is New Delhi’s move to let local players manufacture cheap generic versions of patented life-saving drugs.
Tiff over sourcing
The US has also been opposing India’s local sourcing norms for telecom equipment. Besides insisting on telecom gear to be tested locally for security reasons, India wants gadgets such as Apple iPads, mobiles, printers, scanners and computers to adhere to the Bureau of Indian Standards.
US and European equipment companies were particularly peeved by the rules that made it mandatory for all foreign telecom and power gear to be tested for possible bugs.
They had pointed out to the Indian authorities about the possibility of Chinese equipment being bugged — yet the rap fell on all foreign companies.
Besides, the testing norms were also perceived as non-trade barriers imposed by New Delhi.
Indian officials countered that the accusations made against Chinese manufacturers may also be true of American and European companies.
As an example, the officials referred to the recent Malaysian Airlines plane that met with a tragic end. They said even after the plane went off the radar, its flight path could be traced by Boeing and Rolls Royce, which supplied the engine, because of the markers on the aircraft that allowed them to monitor the location of the aircraft.
“It proves what we always suspectedů gear made by any foreign manufacturer can be bugged and that highlights the need for us to devise ways of testing equipment brought into vital sectors which have security concerns,” the officials said.