SERVICES TRADE RESTRICTIVENESS INDEX (STRI)

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Context

• India’s rank in Services Trade Restrictiveness Index (STRI) improved a notch to 47 from 48 among 50 countries surveyed by the Organization for Economic Co-operation and Development (OECD), as the sanctions-hit Russia slipped below India.

About Services Trade Restrictiveness Index (STRI)

• Launched in 2014, and updated annually, the OECD Services Trade Restrictiveness Index (STRI) is a unique, evidence-based tool that provides information on regulations affecting trade in services in 22 sectors across all OECD member countries and Brazil, the People’s Republic of China, India, Indonesia, Kazakhstan, Malaysia, Peru, Singapore, South Africa, Thailand, and Vietnam.
• These countries and sectors represent over 80% of global trade in services.
• The STRI toolkit can support policymakers to
  • Scope out reform options,
  • Benchmark them relative to global best practice, and assess their likely effects;
  • For trade negotiators to clarify restrictions that most impede trade, and for businesses to shed light on the requirements that traders must comply with when entering foreign markets.

The OECD STRI project includes:

• • An annual monitoring of the regulatory environment for services trade.
  • An easily accessible STRI database of laws and regulations in force, which is updated, verified and peer-reviewed by regulators and trade officials on an annual basis.
  • Composite STRI indices for each country and sector in the STRI that quantify restrictions on foreign entry and the movement of people, barriers to competition, regulatory transparency and other discriminatory measures that impact the ease of doing business.
  • Composite STRI indices to measure the regulatory environment for digitally enabled services (Digital STRI).

2022 STRI of India

• The 2022 STRI of India is above the OECD average and high compared to all countries in the STRI sample.
• Market access to certain key services sectors remains prohibited for foreigners or is subjected to stringent conditions.
• Recent reforms include the privatisation of Air India in January 2022 and the elimination of pricing guidelines for transfers of shares between residents and non-residents.
• The report said India had been progressively introducing reforms over the past years, contributing to a slight liberalisation of services trade in some sectors, most notably between 2018 and 2021.
• Engineering services, computer services, road freight transport and sound recording are the sectors with the lowest score (least restricted) relative to the average STRI across all countries.
• Accounting services, legal services, architecture services and rail freight transport are the sectors with the highest score (most-restrictive) relative to the average STRI across all countries.
• India applies labour market tests for natural persons seeking to provide services in the country on a temporary basis as intra-corporate transferees, contractual services suppliers or independent services suppliers. At least one of the board members and the manager in corporations must be residents of India. Finally, there are preferences for local suppliers in public procurement.

OECD’s stance

• OECD said open and well-regulated services markets are essential to facilitate economic recovery, strengthen resilience to future shocks, and promote a more sustainable trading system in India.
• To ensure that the benefits of open markets and a rules-based international trading system are preserved, policymakers should focus on minimizing barriers that increase trade costs for services providers, weaken the gains from digital transformation, and undermine competitiveness.

OECD

• The Organisation for Economic Co-operation and Development is an intergovernmental organization with 38 member countries.
• It was founded in 1961 to stimulate economic progress and world trade. 
• It is a forum whose member countries describe themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices, and coordinate domestic and international policies of its members.
• The majority of OECD members are high-income economies with a very high Human Development Index (HDI), and are regarded as developed countries.
• The OECD is an official United Nations observer.
• Headquarters: Paris, France.
• India is not a member.

https://www.business-standard.com/article/economy-policy/india-s-rank-improves-in-oecd-services-trade-restrictiveness-index-123021601063_1.html