US commerce secretary Wilbur Ross has taken strong exception to what the Trump administration believes is the unfair treatment meted out by the government to American companies operating in India, especially Walmart and Mastercard, saying there is a limit to the discriminatory behaviour and it will make people worried about investing in India.

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“American companies are showing goodwill and cooperative attitude towards Make in India and the other programs, but there is a limit to the discriminatory behaviour,” Ross told CNBC-TV18 in an exclusive interview.

>>US could reverse decision of withdrawing GSP benefits to India if situation warrants, says commerce secretary Wilbur Ross

“The whole treatment of Walmart after their acquisition of Flipkart is an important issue. Walmart is continuing to expand here. Similarly, MasterCard, there are problems with data localisation where MasterCard is still continuing to invest,” said Ross who is in India to participate in a US-government sponsored trade forum.

This is the first time that the US has made public its disquiet over the matter.

Several foreign companies have made public their angst over the difficulties in competing in Asia’s third-largest economy.

India banned Amazon and Flipkart, which is owned by US retail giant Walmart, from selling products of companies in which they held equity. The government also banned ecommerce companies from forming exclusive selling arrangements with sellers or offer steep discounts to consumers based on those deals. The new rules, which took effect in February, also allowed foreign direct investments only in ecommerce companies that provide marketplaces for buyers and sellers.

The new rules followed a barrage of complaints from Indian retailers and traders worried about anti-competitive practices from the likes of Amazon and Flipkart.

In February, the government again laid down more regulations for the sector, focusing on data localisation, improved privacy safeguards and measures to combat the sale of counterfeit products. The new rules called for the housing of more data centres and server farms locally, amid a broader push for data localisation. This action followed a move by the Reserve Bank of India pushing payments providers such as Mastercard and Visa Inc to store Indian users’ data locally.

Ross said restrictions on commerce such as data localisation will have consequences, adding that uneven playing field runs the risk of populist sentiment demanding some sort of offset. “The Indian government regards new ecommerce rules as clarifications but they have a substantial negative impact on business. Regulatory decisions trigger business decisions,” said Ross.

In his wide-ranging interview, Ross said his government’s job is to try to get a more level playing field for American companies. The US is the largest source of foreign direct investment into India and therefore hopes that India's 'fundamental philosophy' of favouring Indian business versus foreign will gradually change, he said.

On talks with commerce minister Suresh Prabhu, Ross said, "We had very constructive discussions and I met not just with (commerce) minister Prabhu but also with (finance) minister Jaitley and it has been about an hour with the Prime Minister earlier today. So we had very good, very extensive, very far reaching discussions."

Ross was due to be in India for the US-India commercial dialogue in February this year but had to cancel due to scheduling issues.

The US in March this year had announced withdrawal of GSP benefits for Indian exporters beginning May 2 through a presidential proclamation. US president Donald Trump has called India 'Tariff King". India has postponed her plans of imposing retaliatory tariffs on 29 US products till May 16th.

Government sources, responding to this allegation, said the labelling is not appropriate as the US and other countries charge higher duties on some products. Average tariffs imposed by India on american goods are at 13.7 percent which are closer to that of South Korea (13.7 percent) and China (9.8 percent), according to them.

Read our full coverage on Wilbur Ross' India visit here.

First Published:May 7, 2019 4:23 PM IST