After Prime Minister Narendra Modi’s scheduled visit to Washington in late September, New Delhi is likely to host a bilateral meeting between finance minister Arun Jaitley and Federal Reserve chairperson Janet Yellen in November to focus on Indo-US economic ties.
While Modi and US President Barack Obama will discuss a range of issues including civilian nuclear cooperation, defence and strategic affairs, besides economic ties, the meeting between Jaitley and Yellen will be more focused on trade, taxation and monetary policy, government officials said.
Officials from the US departments of commerce and treasury and India’s finance and commerce ministries will also hold discussions in the November meet.
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To finalise the agenda and dates of the meeting, and to set the tone, finance secretary Arvind Mayaram and his American counterpart, deputy treasury secretary Sarah Laskin, will meet in New Delhi on September 23-24. “The finance secretary and his US counterpart will meet here around 23-24 September. That will precede a likely meeting in November between Jaitley and Yellen. We are working on the details,” a senior finance ministry official told FE.
US secretary of state John Kerry visited India on July 31 for a ‘strategic dialogue’ with foreign minister Sushma Swaraj and also met PM Narendra Modi.
The US is India’s second largest trade partner after China. For FY14, trade between the two countries reached $61.5 billion, with India export $39.2 billion to and importing $22.3 billion from the US.
Some of the issues to be discussed during the Modi-Obama meeting as well as the trade and economic bilateral in November could include the already announced increase in foreign investment limit in India’s defence, insurance and railway infrastructure sectors.
India’s tough stance at the World Trade Organization is also likely to figure in the proposed talks.
Last month, WTO talks in Geneva failed on account of the stand taken by India on the issue of public stock-holding for food security.
New Delhi refused to sign the protocol for Trade Facilitation Agreement (TFA), which aims at easing customs procedures.
The tax issues between the two countries include those concerning the mutual agreement procedure (MAP). Under MAP, talks between US and India on their respective shares of taxes from companies operating in both jurisdictions unravelled due to the gap between the transfer pricing margins individually decided by them.
Under MAP, tax authorities in both countries sit across the table and decide how certain cross border transactions are to be taxed. Many tax disputes remain unresolved because MAP talks haven’t succeeded.
Once an agreement is reached to resolve past tax disputes under MAP, India will be able to persuade US to agree for bilateral advance pricing agreements (APA) with India to reduce future tax disputes.
Arup Roychoudhury | The Financial Express