The post covid world exists in a different geopolitical context and the ongoing Ukraine crisis has further altered the strategic equilibrium of the global order. India is situated uniquely in the middle of all these developments and the challenges it faces are also unique.
India is coming out of the shadows of the pandemic induced economic slowdowns and looking forward to accelerating its economic growth. India’s trade and external sector have a significant impact on GDP growth as well as expansion of per capita income. However, there are some issues that need to be discussed when it comes to the Indian economy and trade. The post covid world exists in a different geopolitical context and the ongoing Ukraine crisis has further altered the strategic equilibrium of the global order. India is situated uniquely in the middle of all these developments and the challenges it faces are also unique. India had chosen not to be a part of the RCEP because of its concerns about the onslaught of Chinese imports. With the exception of a trade deal with The UAE, India has also not been able to be a part of any significant bilateral trade treaty in the recent past. What are the issues that plague Indian trade policy and its practice was discussed in deep detail in the session on Economy & Trade at the India Economic Forum & LitFest organised by the SKOCH group. The esteemed panel outlined where India stands in terms of its trade policy and offered recommendations about what can be done to ensure that Indian trade maintains the desired growth levels
Indian Trade Policy: An Outline
In order to make sure that India solidifies its place at the global stage as a major economic and strategic power, it has to ensure economic growth in the bracket of 8 to 10 percent. To do so there has to be an identification of key issues that our trade is facing and dedicated efforts have to be made to eradicate these challenges. India is progressing on the path of self-reliance and there is a need to think about the approach to be adopted to achieve Atma-Nirbharta. We need to strike a balance between isolating our economy and overdependence on external powers. India wants to become a major global power but this goal has to be achieved under a sustainable framework. In the increasingly connected and global world, we need to identify our core competencies in key areas that can take us to global dominance. India needs to use trade diplomacy to develop special economic relationships with countries with which it can have a mutually beneficial relationship.
All these developments are also happening in the context of increased weaponisation of data and newer challenges emanating in the form of technological warfare. Any holistic trade policy has to take into account the current geopolitical challenges that we are facing and then work around them to come up with feasible solutions. Unless we proceed with wider reforms in the areas of our domestic industry, manufacturing, labour laws and investment policies, we will find it difficult to negotiate trade deals that will be in our favour. Our trade policies can not be divorced from our investment policies and there is a need to maintain synergies between the two. To open the doors of economic growth India has to become a more open and globally interconnected economy while protecting its own strategic interests.
Trade and Economy: The Way Forward:
There are visible challenges in front of all of us that need to be addressed when it comes to the formulation and execution of the Indian Trade Policy. Our panel of experts deep-dived into these issues and made the following recommendations:
There is a need for the identification of key areas that can be our core competencies. Pharmaceuticals, Information and Communication technology are some of the areas where India has an edge. By focussing on these areas, India can have favourable advantages at the global level
There is a need to rewire Indian trade relations on the lines of the USMCA that substituted the North American Free Trade Agreement (NAFTA). By identifying key cooperation areas with major economies, more beneficial trade agreements can be constructed
There is a need to ensure foreign investors of fair and equitable treatment under the Indian system and have globally acceptable arbitration standards
There is a need for massive investments in Indian R&D capabilities. Only by supporting domestic institutions that engage in R&D, we can have a competitive advantage over other economies
There is a need to be pragmatic in our trade policy formulation and follow our national interests, areas such as semiconductors and telecom are some of the examples where a focus on indigenous development has protected national interests
There is a need to develop digital India platforms such as UPI in other areas as well, areas such as employment opportunity aggregators on a national level can help people in the remotest areas to find employment
There is a need to boost manufacturing at the level of MSMEs and in rural areas to absorb the workforce into labour and increase productivity
There should also be increased focus on ensuring that there is a smooth transition to a clean energy regime in order to eradicate our overdependence on external energy sources
There should be an increased focus on rare earth elements production in India so that India can focus on high-tech manufacturing
There is a need to reform our internal taxation policies in order to make our economy more open and competitive
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