Smart Investor | 31 October 2015
US asks India to step up investment treaty talks
The US government has again pushed India to expedite negotiations on the proposed Bilateral Investment Treaty (BIT).
The issue came up for discussion at the ninth round of the US-India Trade Policy Forum (TPF) in Washington on Thursday. Draft proposals were exchanged, said Commerce and Industry Minister Nirmala Sitharaman, the co-chair with US Trade Representative (USTR) Michael Froman.
“They (US) wanted us to have a detailed talk on it. The treaty is awaiting Cabinet clearance," Sitharaman said after the meeting.
Discussions started in 2008
The US also expressed concern on control and ownership in the insurance sector. They have praised the steps taken by the Government of India to raise the limit of foreign direct investment (FDI) in the sector to 49 per cent from 26 per cent earlier. However, they do not like the fact that this will not ensure more management control. Apparently, many American insurance firms wish to enter India but want greater ownership and control.
According to an USTR statement: “India took note of US concerns with the recently published guidelines on management control in the sector. Both countries agreed to continue to engage on this issue, to ensure that insurance companies can take full advantage of this new market opening."
India raised the issue of concluding the long-pending totalisation agreement. For this, the US will have to amend its laws, which do not allow temporary foreign workers to claim the contributions they make towards the US’ social security scheme.
“They say as long as we do not have a comparable social security cover in India, they think it may not be fair for them to extend the benefit to us," said Sitharaman.
The US looked “forward to further engagement on this issue," the USTR said. Indian workers account for almost 50 per cent of employment-based US green cards and 40-50 per cent of the H1-B and L-1 professional visas. These workers make yearly contributions of about $2 billion towards the US social security system. However, by the US norms, they need to complete 10 years there for being eligible to enjoy the benefits of this contribution. As a result, workers going there for work for a short period are not able to bring back their contributions.