Services Update from India

Original Publication Date: 
28 March, 2005
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Services Update from India
EQUATIONS
29th March 2005

New GATS-Offer - senior government officials have stated that in its new GATS offer to be submitted by the May 2005 deadline, India is undertaking liberal commitments in audio-visual services, higher education, telecommunications and financial services. While this is not the comprehensive list, they are certainly the highlights of this new and 'improved' offer. Two other important sectors - Accountancy and Legal Services - that were rumored to be included in the offer, are not being opened up, as domestic lobbies continue to remain unclear and unconvinced about including them in the GATS. The chief characteristic of the new offer is deepened market access commitments in Modes 2 and 3, contingent upon developed countries - mainly the US - reciprocating by deepening their Mode 4 commitments. In the event of lack of reciprocity, the government has made it clear that it will withdraw this offer.

Mode 4 - Indo-US FTA? India will continue to push aggressively on the Mode 4 issue with other developed countries like the US and EU. This has been reiterated by NASSCOM (the National Association of Software and Service Companies), the prime industrial lobby pushing for Mode 1 and Mode 4 commitments from the US (as nearly 60% of India's software exports are to the US). Regarding the specific issues of concern, NASSCOM has prioritised the need for concluding 'Totalisation Agreements' to protect the interests of its software professionals working in the US on a temporary basis and clearly - the need for increasing the quota of HI-B and L-I visas to India.

However, the NASSCOM representative also said that as the WTO negotiations, especially on services were progressing slowly and continue to be influenced by political and not economic motives, the industry is exploring other avenues for addressing its concerns. In this regard NASSCOM is pushing aggressively for an Indo-US FTA in Services and sees this as an easier and quicker route to take. Both NASSCOM and other quasi-government research institutes are currently engaged in assessing the tenability of the FTA and will lobby with the government for executing it within the next year.