Christine Bliss, President of the Coalition of Service Industries, emphasised the need for tariff reductions, particularly in the technology sector, as well as addressing non-tariff barriers that impact US firms operating in India.
In an interview with CNBC-TV18, Bliss noted that reducing tariffs, especially under the World Trade Organisation’s Information Technology Agreement (ITA), would be a significant win for US businesses.
“We’ve heard of a 50% reduction in tariffs, as long as that includes abiding by the ITA, covering products such as computers, semiconductors, testing equipment, and software. That would be of direct benefit to our members,” she said.
Beyond tariffs, US businesses see a massive opportunity in India’s digital and services sector. The US services industry already accounts for $55 billion in foreign affiliate sales and $1.26 billion in cross-border services to India. However, regulatory barriers, including restrictions on data flows and local storage requirements, pose significant challenges.
Data localisation requirements, which mandate that financial and digital data be stored within India, are a major concern for American banks and financial institutions. Bliss pointed out that these regulations increase costs, create cybersecurity risks, and disproportionately impact smaller firms that cannot afford the necessary infrastructure.
Another key demand from the US side is a reduction in India’s 12% average tariff on US imports. If India agrees to lower these tariffs on at least half of American imports, Bliss believes it would be a significant boost to US businesses. “If we saw a benefit of that nature, it would be quite real. But again, we would want the agreement to also address non-tariff barriers,” she noted.
Below is the transcript of the interview.
Q: If the bilateral trade agreement has to be meaningful for US companies, from your perspective what should that entail in terms of lowering of non-tariff barriers?
Bliss: The opportunity to negotiate a bilateral trade agreement with India is extremely important. My association represents services and digital firms, and there is a huge existing market opportunity in India – $55 billion in US foreign affiliate sales and about $1.26 billion in cross-border services that are sold to India. So, it is a huge opportunity.
What might this agreement mean? We know that it is focused primarily on tariffs, at least in the initial discussions, and we would be very interested in any benefits and lowering of tariffs. Of course, that’s important. We’ve heard of a 50% reduction in tariffs, as long as that includes abiding by the Information Technology Agreement (ITA) in the WTO, covering products such as computers, semiconductors, testing equipment and software, which would be of direct benefit to our members, we see that as very beneficial.
But beyond that, we think that it’s essential that the agreement covers digital and services barriers as well – things like data flow restrictions on a cross-border basis, data localisation measures are very important. Industries like financial services, communication, technology services, media and entertainment, all of those industries would greatly benefit from bilateral agreement.
Q: Let’s begin with the banking sector. What are the most significant non-tariff barriers or impediments to business that American banks and institutions face in India?
Bliss: I would say in the financial services sector generally, probably the largest barrier is data localisation measures, which means that the Indian government requires, various ministries, mandate the retention of data within the country and require it to be stored and processed there. And what that means as a barrier is that it obviously increases cost, adds burdens, but more importantly, it is riskier and subjects that data to cybersecurity breaches. It also hurts small and medium-sized firms as well since they can’t afford the costs of that kind of local retention and the infrastructure that it requires.
The second area that is very important is limits on foreign equity investment, where there are continuing barriers that we hope will be addressed. For example, in the insurance sector, where the top level of investment is at 74%, there are also restrictions on local management, the nationality of managers, and the control of shares, which are significant.
And then finally, I would mention India’s digital infrastructure that has been set up to manage the digital economy in a way that is discriminatory towards foreign companies such as electronic payment service providers, so we’re concerned about that.
And then finally, you mentioned taxes, and I think that’s an area where banks, in particular, are feeling the impact of discriminatory treatment.
Q: When we speak about the likes of Amazon and Walmart, they have also been facing some regulatory issues in India. In your recommendations to the US government, and also in your discussions with the US Congress, you’ve raised concerns about India’s proposed digital competition legislation. What would you want in the overall bilateral trade agreement in order to make things easier for some of these large e-commerce firms as well? These firms are often referred to as big tech giants.
Bliss: I think there are a number of things. First and foremost, we would want any competition laws to be aligned with those of the United States, and that means they should be fair and equitable in their treatment, and should not discriminatorily bar or place unfair restrictions on foreign suppliers.
Secondly, I think this is very closely linked to the treatment of online suppliers with regard to things like data localisation and the kinds of burdens and restrictions that could be put on them concerning the treatment of data, so we would be very mindful of that.
And then the last thing that I think is very important to mention is actually tariff-related. We believe it is critically important that a bilateral agreement include a permanent moratorium on customs duties on digital content, whether it involves goods or services.
This is something that should be in the agreement itself. Additionally, we would also want India to pledge that it would no longer block or oppose this in the World Trade Organisation, since this moratorium has been renewed annually since its inception in 1998.
Q: In terms of reciprocal tariffs, do you feel that these reciprocal tariffs that President Trump is set to announce on the 2nd of April—referring to it as “Liberation Day”—will really help the American industry?
Bliss: I think there’s no question that if India were to reduce its average 12% tariff on at least half of US imports coming into India, that would be a boon to US industry.
And as I’ve said, for our member companies in the services and digital sector, what we would be focused on is a commitment by India to abide by its WTO Information Technology Agreement commitments and apply zero tariffs to things like computers, semiconductor manufacturing and testing equipment, and software.
So, I think that if we saw a benefit of that nature, it would be quite real. But again, we would want the agreement to also address non-tariff barriers.
Q: What would be your recommendation in terms of average tariff rates being brought down? We understand that negotiations are ongoing. It seems that nothing is off the table, and the US wants India to reduce average tariffs from their current levels. Would you prefer an overall reduction, or would you want specific tariff reductions for specific product lines and sectors?
Bliss: As I mentioned, for our particular group of companies, and again, the US industry as a whole, is very broad across manufacturing, agriculture, etc. and specific sectors will have specific concerns regarding Indian tariffs on imports.
But for us, particularly in the technology sector and related services, we would want to see tariffs set at zero under the Information Technology Agreement.
If any goods remain above that level, we would want them as low as possible.
Q: Any recommendations to the US government on the differential rate of taxation for American banks and certain US companies?
Bliss: I think for American banks, they seek equitable treatment both in terms of how they are taxed and the level of taxation, so they do not want to be discriminated against.
So, that would be the strongest piece of advice or request that we would make to the Indian government in terms of what could be achieved under a comprehensive agreement with India.
