Govt inaction on sanctions worries industry

MUMBAI, JUNE 21: Experts and leading industry bodies have asked the government to take suitable steps to counter the impact of sanctions imp...

MUMBAI, JUNE 21: Experts and leading industry bodies have asked the government to take suitable steps to counter the impact of sanctions imposed by the United States as sanctions would affect the growth of trade and industry. There is also proposal that the government should challenge sanctions in the World Trade Organisation WTO.

Criticising the inaction on the part of the government on this front, a senior official official of a leading private telecom company said: 8220;we need funds to set up the project. After the sanctions, we will have to shell out more money as our cost of borrowing will go up. I8217;m appalled at the inaction on the part of the government to tackle the problem. The government seems to be over-confident.8221;

Flaying the Finance Minister8217;s statement that there are alternative sources for funding, he said 8220;many telecom, power and port projects will be delayed and project costs will shoot up.8221; 8220;Sanctions slapped on the government projects and technology upgradation projects defeat thevery purpose of globalisation and economic reforms initiated by the government,8221; said Vijay Kalantri, president, All India Association of Industries AIAI.

Ashok Pratap, a leading tax expert and a director of several multinational companies, said the government can consider the World Trade Organisation route in responding to US sanctions. 8220;In addition to enacting their own legislations to protect against American infringement of their sovereignty, some nations have also, in appropriate situations, taken the US to the WTO dispute settlement panels challenging the US attempts to enforce its own standards and laws on the world,8221; he said.

Pratap, a member of American Society of International Law, said the way European Union EU formulated its grounds before the World Trade Organiation 8211; regarding a US legislation called Helms Burton Act 8211; is interesting and may be of relevance to India. Quoting the Canadian Secretary of State for Latin America, he said 8220;the real issue is whether it is appropriate forany country unilaterally to take measures intended to force other countries to agree with its foreign policy.8221;

Ramu Deora, president, Federation of Indian Export Organisations FIEO, said these sanctions are 8220;unfair and and may prove to be counter-productive to the US.8221; He was critical of the decision that the US Trade Development Agency should not consider new projects and that US Exim Bank and other related agencies should not consider new commitments for credits and guarantees.

Another leading industrialist, who preferred anonymity, criticised the stand of some trade bodies on sanctions. 8220;Confederation of Indian Industry had stated that private sector would not be affected by the wide-ranging sanctions. My cost of borrowings abroad has gone up. I won8217;t get the appropriate technology. How can one say it will not affect the private sector,8221; he said, adding that there would be delays in project implementation.

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Making a case for challenging the US action, Ashok Pratap cited the example of importsof shrimps from Thailand and Malaysia which were banned by the US on the ground that the manner of catching such shrimps violated certain US laws relating to preservation of turtles.

8220;A US court upheld Thailand8217;s contention that it did not violate United States laws, but Thailand decided to press the issue before the World Trade Organisation on the ground that the United States cannot impose its own standards and laws on the international trading community,8221; Pratap said.

Impact on Indo-US trade

MUMBAI: The US is the major trading partner of India, accounting for 19.5 per cent of India8217;s exports. India exported goods and services worth Rs 24,641 crore to the US. India imported goods and services worth Rs 13,509 crore from the US in 1997-98. This is 8.9 per cent of India8217;s total imports.

According to FIEO president Ramu Deora, India8217;s imports from the US are large enough to make a meaningful impact on the latter8217;s exports and jobs.If India8217;s exports are affected by sanctions, India8217;s imports will also come down, Deora said.