India must have a Trade Negotiation Authority
I had the privilege of doing a Keynote at the Annual Conference of the Indian Economic Association. Here is a summary of the remarks on the subject of “India’s External Sector”.
1. History: 1947-1990. A closed, protected Indian economy, with controls on domestic production, trade and investment.
2. In a crisis, 1991 witnessed a paradigm change in policy, opening trade and Investment and bringing in competition.
3. Currently, there is a volatile global economic situation. A USA/China trade war. Challenges in the Eurozone and a reminder that 2018 was the 10th Anniversary of the 2008 Global Financial Crisis.
4. In regard to the External Sector, Trade is key:
a. The USA/China Trade war impacts India and others.
b. WTO is wounded and incapacitated.
c. FTAs have been halted because of concern about adversely impacting domestic industry.
d. BITs likewise.
e. Because of damage of cheap imports, India has had to increase import tariffs on 50 products.
f. The trade deficit with China is huge.
g. India does not have a dedicated agency dealing solely with Trade negotiations. It must have one. Indian Trade Negotiations Authority (ITNA) should be set up.
h. India’s participation in Regional Trade Agreements would progress better if manufacturing and services were treated in similar manner and there would be safeguards against unfair pricing.
i. There is no clear plan to develop products currently dependent on imports. This is needed, sector-wise.
j. India’s export strategy lacks a long term plan focused on markets and products. This is essential to multiply exports.
k. FDI has been rising steadily and can see further rise given further simplicity of doing business and adjustments in policy and participation in Global Supply Chains.
l. Joint ventures are not working, generally. Foreign companies are preferring to come on their own.
m. Tourism earnings of foreign exchanges can increase substantially if infrastructure and safety is better.
n. Remittances into India at $80 billion are high but can be raised further. Another action area.
o. Crude oil imports need special attention so as to reduce imports and save on expenditure. PCRA has framed a set of recommendations. These need to be acted on.
Indians are very talented. No need for fear of the world. We can take on the world, and be successful.