Question two: Trade Barriers in India A restriction imposed on the free flow of trade is knownt as the trade barriex. The trade barriers are classified as tariff barriers or non-tariff barricrs. This article discusses in detait the barriers faced by the U.S. companies when exporting to ladia. Import Licensing The most common noth-tariff barrier is the prohibition or restriction of goods that are imposed through import licensing requirements. Certain products are subjected to licensing related trate barriers, atthougli tndia has eliminated its impont licensing requircments for most consumer goods. The import licenses for motorcycles are provided only to forcign nationals that permanently reside in India, working in India for forcign firms that value more that equity or to forciga nations that work at embassies and foreign missions, Very fev domestie importers import vehieles without a valid license, where the imports are counterbalanced by exports that is atioutable to the same importer. Negative List India maintains a 'negative list' of imported products that come under various forms of nontariff regulation. The negative list is further divided into three eategories. They are - Banned or prohibited items that inchude tallow, fat and oils of the animal origin. - Restricted items that require an import license for goods like such as livestock products and certain chemicals. - Canalised items like pharmaceuticals that can be imported only by the government trading ownerships that required the cabinet approval regarding the import timing and quantity. Entry Requirements With respect to entry requirements, India has divided goods that are new, those goods that are secondhand, remanufictured, refiarbished or recondlitioned. India permits the imports of scoondhand capitat goods by the end tusers without carrying an import license, provided the goods are undamaged for five years. The eountry's Forvign Trade Policy segregates remanufactured goods in a similar manner to the secondhand products, without considering that the remanufactured goods have been restored to the original working condition, mecting the technical and safety specification that is applied to the
spare parts can be imported only if an Indian Chartered Engineer certifies that the equipment retains at least of its life, while rodeveloped computer parts from domestic sources are not applicable for this requirement. Some of the problems that the stakcholders' report includes the excessive details that afe tieceled in the ticense application, the quanfity limitation that is set oa the specific part number and the loog delays between the application and the grant of license Testing, Labelling and Certification The Indian Govermment has sorted out 109 commodities that that must be ecrtified by the Bureau of Indian Standards (BIS) and the National Standards body. Apart from this, the Food Safetyand Standards Authority of India, implemented under the Food Safety and Standards. Act, 2006 lasd derwn standsuls for articles of food and regulating the manufacturing. processing, distribution, sale and inport of food. These regulations were brought in to make sure the quality of goods. Whereas, otber countries use them as measures fo protect the poods. Anti-dumping and Countervailing Measures Anti-durping and countervailing measures are executed by the WTO Agreements to protect the domestic industry from facing severe injury that is eaused by dumped or subsidized imports. India imposes these regulations on a time-to-time basis to proteet the domestic manufacturers from dumping. This antidamping policy has raised concems about the transparency and due process. The officials have taken steps to increase the applocation of the antidamping law. Export Subsidies and Domestic Support Sevenal export subsidies and other domestic support have ben provided to various industries to make them globally competitive. Export eamings are exempted from taxes and the exporters are not liable for the local mathifacturing tax. The export subsidies intend to displace exports from ofher countries into third country markets, whereas the domestic support acts as a direct barrier to access the domestic market. Expert Subsidy Programs Indian has launched multiple export subsidy pirograms that include exemptions from taxes for certain export-oriented enterprises and for exporters in Special Economic Zones. Sectors like textiles and apparel, paper, rubber, ioys, leather goods and wood products reecive subsidies considering the exiemptions from customs duties and intemal taxes that helps in determinitig the export performance. This has made the fadian
textile sectors to become a beneficiary of many export promotion meastares. Besides this, the Government of India has inereased the subsidy for garment sectors to develop employment opportumities. Implementation of Policies In 2015, the Indian Goverument authorized 20 per cent of its public procurement to be given to the Indian based micro, small and medium enterprises. In 2017, the Indian cabinet has approved a public procurement policy that encourages preferences for Indian manufactured goods to promote the 'Make in India' initiative. This is aimed to develop the local manufacturing and to boost the domestic demand for locally manufacturing products. The National Mantafacturing Policy is used to increase the local content requirements in govemment procurcment in certain sectors like information communications technology and clean eneryy. The Department of Industry Polscy and Promotion (DIPP) has issued two notifications under the Public Procurement 'Preferential Blectronics Order' and 'Cyber Notification' that requires local content for state and central government procurements that jeive preferences for domestically manufactured electronic goods and cyber-security software products. Service Barriers The following are the services that include restrictions. - Insurance -Banking - Securities - Motion pictures -Accounting - Construction - Architecture - Engincering - Retailing - Legal services - Express delivery services - Telecommunication The Indian Government has strong ownership in major service sectors like banking and insurance. Foreign investments made in business in eertain service sectors that include financial services and retait. Foncign participation in professional services has also been restricted, and in the case of legal services, it is prohubited entirely.
manufactured electronic goods and cyber-sceurity software products. Service Barriers The following are the services that include restrictions. - Insurance -Banking -Secarities - Motion pictures -Accounting - Construction -Architecture - Enginecring - Retailing - Legal services - Express delivery services - Telecommunication The Indian Government bas strong ownership in major service sectors like banking and insurance. Forcign investments made in business in certain service sectors that inchude financial services and retail. Forcign participation in professional services has also been restricted, and in the case of legal services, it is prohabited entircly. Other Barriers Equiry restrictions and other trade-related investment measures result in an unfair advartage to donestic companies. The Indian Government had restrieted FDI in sectors-like retail trade and agriculture. Besides this, there is an unpublished policy that advances the counter trade. Several Indian companies both government-owned and private organise small countertrades. 1. Define trade barriers? 2. From the above article, elaborate on two of the trade policies that are implemented by India against US products?