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Better taxation, regulatory system would further expand India-US economic ties: Ambassador Garcetti

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New Delhi, Jan 30 (PTI) US Ambassador Eric Garcetti on Tuesday pitched for better taxation and regulatory framework in India for expansion of bilateral economic ties, and said the rhetoric that everything has to be made in India could slow down the pace of the country's growth.

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The envoy said "opaque corporate tax practices" still are a "barrier" to too many American companies that want to be in India and that export policies have to be changed if India is to achieve its goals.

In an address at the Indo-American Chamber of Commerce (IACC), Garcetti asserted that the US wants to see an India that doesn't look at self-reliance as a "fortress" but instead as the strength of Indian companies to compete with anyone in the world.

Delving into various facets of fast-growing India-US engagement, Garcetti said there are no areas of cooperation that are "off limits" now. "We used to say the sky's the limit; now we are beyond that." "We are even working in space together; we are in the depths of the ocean together. We have literally no limits to this relationship, horizontally or vertically," he said.

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On the economic engagement, the US ambassador noted that the flow of foreign direct investment into India is not registering the pace at which it should be, adding the investments are going to Vietnam and other countries in Southeast Asia.

"Right now, we have a USD 40 billion trade deficit with India and even greater one with China and we want to see the foreign direct investment from China shift here (India)," he said.

"The FDI is not flowing into India at the pace at which it should be. It is going to countries in Southeast Asia like Vietnam, places like Mexico," he said.

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"I would selfishly like to see more of that happen here (India) and I need your help," Garcetti told the industry captains and officials.

The "rhetoric" that everything has to be made here in India would slow down the pace, the ambassador said.

"If you tax inputs, many of you in manufacturing know that, you are taxing your outputs -- you are not taxing us, you are not protecting the market. What you are doing is limiting a market," he said.

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"So, we absolutely want a self-reliant India, we don't want to contradict that but we also want an India that doesn't look at self-reliance as a fortress but instead with the strength of Indian companies that can compete with anyone in the world," he said.

Garcetti said: "This is not a paradigm of old that invaders are coming to extract...This is a relationship of equals that when we break down the walls in both of our countries whether they are bureaucratic, regulatory, taxation, whether part of the federal system, etc, can release more jobs, prosperity and more strength." The US ambassador also underlined the need for reform of the taxation system in India.

"We also see opaque corporate tax practices still are a barrier to too many companies that want to be here. This is a great moment for you to recruit more American companies," he said, adding CEOs of top American companies are very bullish about India.

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"They want to invest but we have to ensure that there is protection for intellectual property, courts often decide that there is violation of intellectual property but then there is no consequence," he said.

Garcetti said this is increasingly important to Indian companies too as they are producing patents at such a "roaring rate" now compared to the past.

"The strengthening of this is not just with the good rule of law and decisions but the consequences will incentivise more investments as people will know that investment, deep investment into research and development will be protected for a longer period of time," he said.

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Garcetti said the export policy is an area where we are "honest with each other" and that the strength of the ties between the two sides facilitated frank discussions on these issues.

Nobody wants a slow permit whether that is for entering or exiting a country, he said, noting speedy customs clearance, tax and regulatory stability always encourage better growth.

The US envoy also argued that "inner compatibility" is a crucial characteristic for economies of scale, saying countries that prioritise their own standards over connectivity will find it difficult to make for the world.

"Remember Japan during the cellphone wars years ago, they bet big on their own standards. India is big enough to have its own market but if (you) want to have dominance in the world market, we have to decide on the standards together," he said.

It is exciting to see that happen in areas of 4G, 5G, open RAN (Radio Access Networks) as what India and the US are doing in the area is very different from our "main competitor in the world who want to use telecommunication to spy on its citizens and also spy others around the world," he said.

The comments are seen as an apparent reference to China. PTI MPB KVK KVK

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