US in wait-and-watch mode on India

Much like an aircraft flying in circles around fog-hit Delhi, the US government, ahead of President Barack Obama's visit to India in January 2015, seems to have opted for an holding pattern on India while keeping the pressure on.

In April 2015, the office of the United States Trade Representative (USTR) is expected to make a "thorough review of India's environment for IP (intellectual property) protection and enforcement".

Similarly, the US International Trade Commission (USITC), an independent, fact-finding federal agency, is to prepare its new report to examine Indian policies that discriminate against US trade and investment and submit to the House Committee on Ways and Means and the Senate Committee on Finance in the US in September 2015.

However, both the USTR and the USITC have, in their just-released observations on India, have desisted from making any strong adverse comments on the country.

Instead, they seem to prefer to hinge hopes on the policy approach that the new Narendra Modi government will take in the coming year.

The USTR statement, much to relief of India, having chosen to not downgrade India under its Special 301 provisions, which could have impacted some trade benefits that India enjoys with the US, said: "India has made useful commitments in recent months, including to institutionalize high-level engagement on IP issues. The United States urges India to further strengthen and deepen our bilateral engagement on IP issues in the coming months and beyond."

The USITC reports, released in December, talks of how India and the US could have enhanced mutual trade between 2007 and 2013 had it not been for some policies of India. But it does not say India is impacting the US economy or jobs in a major way.

It says: that India accounts for a rather small share of US global trade, and the effect of completely removing barriers on the broader US economy and US jobs would be quite limited. "India represents less than 2 per cent of US commercial engagement abroad, large increases in bilateral economic engagement translate into very small effects on the US economy (a less than 0.05 per cent increase in US GDP and US employment)."

What is important to note here is that the "0.05 per cent" is a composite number and will include impact on account of all factors, IP, tax and foreign direct investment regulations in India.

The net impact of IP alone will be a fraction of this. In some ways, experts point out, that it is this observation which may give strength to the Indian argument of the need to weigh this impact on the US companies against putting in place IP law and polices that could have an adverse impact on public health in India.

This is not all. Giving details of the select rulings in Indian courts on pharmaceutical patents in India, quoting a written testimony made to the USITC, the USITC report says: "these cases are not uniformly negative for US and other multinational companies; some have been decided in favor of the patent holders.

Moreover, according to one expert, the decisions provide evidence of due process for foreign companies; deciding authorities have reviewed the facts and law and issued reasoned decisions."

The upshot at the moment is that the USTR and USITC findings, which have both come up in December, seem to, in a sense, imply that the US may be wanting to stick to a holding pattern without moving one way or the other in its stance on India and, at the same time, putting pressure by preferring to watch the actions of the new Indian government and the dialogue it intends to have with the US in 2015.