Washington: A leading US trade association, seeking stronger commercial relations with India, has welcomed the Indian government's decision to review the Preferential Market Access (PMA) policy for domestically manufactured electronic goods.

The US-India Business Council (USIBC), which comprised of more than 350 of the top-tier US and Indian companies, said that it has consistently argued for market-based incentives, not mandates, to encourage manufacturing in India.

Specifically, USIBC supports carving out the private sector from any preferential market access manufacturing policy being considered by the Indian government, it said.

"India's rethink of its PMA policy sends a strong and welcome signal that India is listening to investors and that channels of communication through organizations such as the US-India Business Council are working," USIBC President Ron Somers said

"There are many US companies manufacturing in India, and they want to expand. But they want to do so based on market-based principles, including adequate infrastructure, business-friendly policies, and access to a skilled workforce, all elements associated with a free-market economy. A mandated approach will only drive job creators away," said Somers.

USIBC noted the entire PMA policy will be reviewed and will not impose domestic manufacturing requirements on the private sector.

India's Department of Electronics and Information Technology (DEITY) is expected to draft a revised policy in the next four weeks.

USIBC had urged India to reconsider its policy to mandate manufacturing of electronic goods in India with the aim of creating jobs in India, and to prevent any security breaches to India's vast telecom and IT sector.

Arguing that the "flawed policy" would not help in either case, American firms and USIBC had argued that any reference to private sector mandates should be excised from any policy.

Regarding security, USIBC has suggested that high-level dialogues be convened to share best practices and protocols about how India and the United States can bolster security.

(Agencies)

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