Officials relieved at joint statement

The tone of the joint Us-india Economic and Financial Partnership statement, signed on Thursday, has brought in a sense of relief among Central government officials. The reason is that this is the first time that there is no ask from Capitol Hill on economic reforms.

Unlike the past joint statements of 2019 and 2016, this statement has not flagged any contentious issues. An official said this happened because the tax reforms by India in the past one year had made a positive impact. India has signed on to plans for a global minimum tax on corporations and has removed the disputed retrospective tax levied on several companies.

As a result, while the statement mentioned a data-protection framework, reforms in the insurance and banking sectors, and payments system modernisation, there was no indication of whether India or the US would take steps to amend their positions on these.

Exchange rate issues and import duties on several lines of US imports to India were not raised. This is a change from the seventh meeting in 2019. That statement noted India had made “significant progress in recent years to resolve bilateral tax disputes between the two countries”, and it had moved to provide certainty to taxpayers through the existing Mutual Agreement Procedure and bilateral Advance Pricing Agreement relationship.

The Indian side shared some details of its plans on PSU “bank recapitalisation and plans to merge some state-owned banks”.

The 2016 statement had an even larger ask from India. These included steps to remove “bilateral tax disputes”. In addition, “expert staff from the (US) Treasury and the (Indian) Ministry of Finance are having consultations on the US experience and international perspectives on the regulatory design for India’s recently launched payment banks”.

The expectations from India were made clear. The tone of the eighth joint statement is neutral in all these aspects.