Aditya Kalra, David Lowder and Shivangi Acharya
NEW DELHI/WASHINGTON (Reuters) – India has scrapped its laptop licensing policy after behind-the-scenes lobbying by U.S. officials who remain concerned about New Delhi’s compliance with WTO obligations and new rules it may issue, according to trade officials and the US government. emails reviewed by Reuters.
In August, India introduced rules requiring companies such as Apple (NASDAQ:), Dell (NYSE:) and HP (NYSE:) to obtain licenses for all shipments of imported laptops, tablets, personal computers and servers, raising concerns that this process may slow down. down sales. But New Delhi reversed the policy within weeks, saying it would only monitor imports and decide on next steps a year later.
The US government emails, obtained through a US open records request, underscore the level of alarm that Indian restrictions have caused in Washington and how the US scored a rare lobbying victory by persuading Prime Minister Narendra Modi’s usually inflexible government to change policy.
US officials have often been concerned about sudden changes in Indian policies, which they say are creating an uncertain business environment. India says it announces policies that benefit all stakeholders and encourages foreign investment, although it often prioritizes local players over foreign ones.
Some of the language in the documents was harsh, despite the friendliness that both sides often demonstrated in public. US officials were upset that India’s changes to laptop imports came “out of the blue”, without advance notice or consultation, and were “incredibly problematic” for the business climate and $500 million in annual US exports, documents showed and emails.
Research firm Counterpoint estimates the Indian laptop and personal computer market to be worth $8 billion a year.
US Trade Representative Katherine Tai met with Indian Commerce Minister Piyush Goyal in New Delhi on August 26, shortly after the policy was announced. While USTR’s public remarks said Tai “expressed concerns” about the policy and “noted” that stakeholders needed to be consulted, during the meeting she privately told Goyal that the US wanted India to “reverse this requirement” , as shown in the USTR white paper.
India’s “surprising” announcement is “causing the US and other firms to think twice about doing business in India”, it said in the “talking points” of its briefing document.
Around the same time, US trade diplomat in New Delhi, Travis Coberly, told his USTR colleagues that Indian officials had acknowledged that the sudden introduction of the laptop licensing policy was a mistake.
India’s Ministry of Information Technology “realizes they (India) screwed up. They admitted it. American companies here are pressuring them about this,” he wrote.
Coberly did not immediately respond to a request for comment. The US Embassy in New Delhi declined to comment on “private diplomatic communications,” referring queries to the Indian government.
India’s Information Technology Ministry did not respond to requests for comment.
FOLLOW INDIAN POLITICS
In response to questions from Reuters, Brendan Lynch, acting assistant US trade representative for South and Central Asia, said the US trade office is satisfied that the current monitoring system has had minimal impact on trade so far, but is still closely monitoring India’s inspection of imported devices to ensure that it was implemented in accordance with WTO obligations and “had no real adverse impact on trade relations.”
Goyal’s commerce ministry said in a statement to Reuters that Tai “did raise some concerns” during their August meeting and New Delhi was “relaying security concerns to India” at the time. He did not specify why he reversed his decision or the US emails.
Three Indian officials, including two from the Commerce Ministry, who spoke on condition of anonymity because they were not authorized to comment, said New Delhi did not change its policy under any US pressure and took the call because it understood that the local the production of laptops and tablets is unacceptable. at this stage it doesn’t really matter.
While Tai was visiting New Delhi, the press attaché at the US Embassy in New Delhi wrote an email to colleagues warning of caution when US officials speak to the press – another sign of how sensitive New Delhi can be. Delhi.
If asked about the transfer of laptops, the US government responds this way: “The (Indian) government has the right and responsibility to develop trade policies that meet the needs of the people of India,” the email said.
The US State Department has also expressed concern about this policy.
“U.S. firms perceived this move as highly protectionist and out of sync with the progress India has made in improving the investment climate,” State Department spokesman Timothy Wiley wrote in an email to USTR colleagues containing “talking points.”
“Some US companies in India told us that they were pushing to increase production at their Indian headquarters but were confused by this unexpected move.”
The State Department declined to comment.
Modi has made several decisions that have hurt U.S. firms, such as forcing Mastercard (NYSE:) and Visa (NYSE:) to store data locally and forcing Amazon (NASDAQ:) to comply with strict e-commerce rules that once crippled its operations. But the Indian authorities did not abandon this policy, despite resistance.
Emails reviewed by Reuters show HP told the USTR that the “policy (and its purpose)” of laptop licensing is “very problematic.”
“Despite our very broad ‘Made in India’ portfolio, this will have a significant impact on HP’s sales in India,” Amy Burke, the company’s head of global policy and strategy, wrote in an email.
HP did not respond to Reuters queries.