India must do more to become China alternative for manufacturers, outgoing US ambassador says

Kenneth Juster said New Delhi needs to take more policy action if wants to become a new destination for manufacturing investments in the region

India is keen to attract US companies looking to move out of China but has had little success mainly because of differences on market access

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Indian Prime Minister Narendra Modi speaks at the opening ceremony of ‘Make in India Week’ in Mumbai in 2016. Photo: AFP

Published: 4:00pm, 6 Jan 2021Updated: 9:36pm, 6 Jan 2021

A senior US diplomat has criticised Indian Prime Minister Narendra Modi’s trade policies, saying growing restrictions on market access and limits on the free flow of data are standing in the way of the South Asian nation becoming an alternative to Chinese supply lines.

India will need to take more policy action if it wants to become a new destination for manufacturing investments in the Indo-Pacific region in the post-pandemic era, outgoing US ambassador Kenneth Juster said in New Delhi on Tuesday.

Juster warned about “growing restrictions on market access to certain US goods and services, increasing tariffs, new limitations on free flow of data and a less than predictable regulatory environment for investors.”

Kenneth Juster, the outgoing US ambassador to New Delhi, pictured with exiled Tibetan spiritual leader the Dalai Lama in India. Photo: Twitter

The Modi administration is keen to attract US companies looking at setting up manufacturing facilities out of China but has had little success mainly because of differences on market access. These include India’s proposed policy for e-commerce, its data protection bill and US companies MasterCard and Visa being treated at par with government-backed RuPay.

It remains to be seen whether the government’s “self-reliant India” policy will lead to higher tariff and no-tariff barriers to trade limiting capacity to integrate into global value chains, the ambassador said.