US trade body cites MSP ‘distortion’, internet shutdowns and data localization in report

The US also raised concerns regarding import of medical devices in India, ever since India’s regulator (Central Drugs Standard Control Organization or CDSCO) suspended approvals of existing and new applications for import licenses in 2024.

India’s high tariffs aside, the United States Trade Representative (USTR) has pointed out fresh issues such as Minimum Support Price, curbs on import of medical devices, internet shutdowns and data localisation rules, the body responsible for America's trade agreements with foreign governments said in its latest report released on March 31.

A comparison with the report under previous US regime, released last year in March, showed that the US trade office had raised the issue of agriculture subsidies, and called the system of MSP and public procurement as unfair.

The USTR’s 2025 National Trade Estimate report too has pointed out agricultural tariffs imposed by India as ‘distorting’.

“Producers of 25 agricultural products benefit from the government’s Minimum Support Price (MSP) program, which utilizes one of the most production- and trade-distorting types of support, market-price support,” the report said.

The office also targetted other programmes like credit subsidies, debt waivers, crop insurance and input subsidies like fertilizer and fuel.

“These subsidies, which are of substantial cost to the government, lower the cost of production for India’s producers and have the potential to distort the market in which imported products compete,” USTR report said, targetting the public procurement programme, especially for rice.

“India’s excessive subsidization through market-price support has gone far beyond its domestic food security needs and has helped India secure its place as the top global exporter of rice, accounting for more than 40 percent of global rice exports in recent years,” USTR said.

The US also raised concerns regarding import of medical devices in India, ever since India’s regulator (Central Drugs Standard Control Organization or CDSCO) suspended approvals of existing and new applications for import licenses in 2024.

The new report also had a section on ‘Roaming’, highlighting the recommendations made by India’s telecom regulator to Department of Telecommunication asking machine-to-machine devices be switched to domestic networks within six months.

The US also noted that shutdowns by India also had an impact on its service exports.

“These shutdowns restrict access to information and services, disrupting commercial operations, and thereby undermining a free and open Internet and impeding trade in the digital economy. The United States continues to monitor the impact of these events on US trade and investment, including services exports,” it said.

The report also mentioned the ‘burdensome requirements’ placed on data providers owing to draft rules imposed under the Digital Personal Data Protection Act (DPDPA).

On the digital front, the new report acknowledges the move to eliminate the equalisation levy and introduction of Patents (Amendment) Rules, 2024, which are expected to raise efficiency, but was critical on issue of patent disputes in pharma sector.

“US exporters also raise concerns about regional variations in the application of customs procedures and in documentation requirements. These could be addressed with a robust advance ruling system in which regional discrepancies are superseded by rulings issued at a central, territory-wide level. However, US exporters often report that advance rulings from one region are not respected in another region and that there is no effective central mechanism to resolve the differences,” it added.

India is in the process of negotiating a bilateral trade agreement, and is hoping to escape US reciprocal tariffs, which are to come into effect on April 2. The USTR had visited India to work out the modalities of bilateral trade discussions between March 25-29.