US legislators urge India to reconsider preferential market access policy

Bothered over India’s preferential market access (PMA) policy, which mandates that a certain percentage of all IT as well as telecom equipment and electronic equipment be sourced domestically, the 21 members of US Congress from both the Democratic and Republican parties voiced their concerns to Nirupama Rao, the Indian ambassador to the US, urging India to reconsider its policy decision. The US legislators cautioned that giving preference to domestic IT vendors in government contracts and in other security-related purchases, could detrimentally impinge on the trade and investment relationship between the US and India.

The preferential market access (PMA) policy, which was approved by the Indian government in February, has since then faced severe criticism from particularly the US’ information technology (IT) industry, which has been instrumental in driving India's significant growth in IT and telecommunications sectors and has enjoyed market access in India over the past two decades. US industry, which plans to keep lobbying to roll back the PMA policy, highlighted that the new policy is a marked departure from the past openness in India's IT sector to foreign companies and warned that the top-down industrial policy mandates will only serve to stifle investment and confuse manufacturing and job creation.

The development emerged at a time when India’s External Affairs minister S M Krishna was in United States of America to hold the third round of India-US Strategic Dialogue. Citing that there was no significant change of course in the problematic, discriminatory measures that the Government of India adopted or is considering in this and other sectors, the US officials were hopeful the Indian government will make the right choice.

Meanwhile, the Indian External Affairs minister also brought forward various pressing issues faced by Indian businesses in America. The challenges encompassed worsening environment for mobility of professionals, the protectionist sentiments against the global supply chain in services industry, the refusal to even consider a Social Security Agreement that affects the lives of 300,000 non-immigrant Indian professionals in the US, the unresolved market access issues, or, the persisting presence of India in the Super 301 Priority Watch List and the US department of labour's list.

However, the progress made by two of the largest democracies of the world’s gave Krishna the confidence that the governments would take swift action to overcome the challenges. While he highlighted that the bilateral trade between India and the US in goods and services touched a milestone by crossing $100 billion last year, he also said that India has been one of the fastest growing destinations for US exports.