US lawmakers object to India's local IT preference policy

India's new policy giving preference to local vendors could hurt the trade relationship between the two countries, the lawmakers say

India should reconsider a new government policy giving preference to IT products from vendors based in the country, 21 members of the U.S. House of Representatives said Tuesday.

India's preferential market access (PMA) policy, giving preference to Indian IT vendors in government contracts and in other security-related purchases, could "detrimentally affect" the trade and investment relationship between the U.S. and India, the lawmakers said in a letter to Nirupama Rao, the Indian ambassador to the U.S. The Indian government approved the policy in February.

The policy "represents an unprecedented interference in the procurements of commercial entities," wrote the lawmakers, including Representative Doris Matsui, a California Democrat, and Representative Mike McCaul, a Texas Republican. "American [IT] companies have enjoyed market access for U.S. exports in India over the past two decades, helping drive the country's significant growth in the IT and telecommunications sectors."

The new policy is a "marked departure" from the past openness in India's IT sector to foreign companies, the letter said. "Top-down industrial policy mandates, however, will only serve to stifle investment and stymie manufacturing and job creation," it added.

India has defended the policy as important for its national security. A representative of the Indian embassy in Washington, D.C., wasn't immediately available for comment.

Other representatives signing the letter included Anna Eshoo, Zoe Lofgren and Mike Honda, all California Democrats; Lamar Smith, a Texas Republican; and Marsha Blackburn, a Tennessee Republican.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Grant Gross

IDG News Service
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