Strategies are needed to make industries more competitive than protectionist policies

The government has signaled it will reconsider its foreign trade policy. In a recent statement, the Union Commerce Secretary called for speeding up the signing of FTA-free trade agreements with countries around the world. As the countries of the world move towards bilateral trade and regional trade agreements, it has become important for India to sign such agreements as well. In his talks with the Export Promotion Council, Commerce Minister Piyush Goyal also agreed with the Commerce Secretary's view. Negotiations with countries such as the UK and Australia to reduce customs duties are moving fast. The reduction in customs duty is an exercise in concluding a free trade agreement. The US is not keen on a new free trade agreement but India is discussing with it issues related to the trade alliance so as to boost bilateral trade.

Industries are being advised by the government that Indian industries need to be competitive instead of seeking protection. Signs of speed in the FTA are welcome from the government which has so far been pursuing a protectionist policy against imports. Self-reliant India does not mean that India is looking for an alternative to imports, it is claimed, but the intervention through policy creates a somewhat different impression.

According to a report, tariffs have been increased on about 200 product categories in the country since 2015, affecting 60 per cent of imports. After the liberalization standard of 191, the country's exports began to increase and in the first decade of the current century, India got a big boost in development. But the subsequent retreat in policies has had an impact on foreign trade over the past few years.

With the mitigation of the Corona mitigating, the economies of the world are seeing a rapid recovery and there is an opportunity for India to reap the benefits of this recovery. In such a scenario, India needs to move forward with a bilateral trade agreement and continue to do as much FTA as possible. The picture is that India will see strong growth in domestic trade this year, following last year's lows, but this growth will only be short-term and medium-term, which will require India to adapt to the export front in the long run. If we want to send a message to the world that India is an open economy, we have to adopt a liberal policy on the tariff front. Which is a first requirement for the FTA.

The status of the Regional Comprehensive Economic Partnership (RCEP) also needs to be reviewed to enhance the position of the country's industries in world trade. India's decision not to accept the unfavorable RCEP norm has been a relief, especially for the dairy industry. Had the agreement been reached, rivers of dairy products from New Zealand and Australia would have started flowing into India, threatening to seriously affect the country's dairy sector, which has been developed by farmers on a co-operative basis.

Fifteen members of the RCEP have avoided accepting certain Indian conditions to protect the country's auto and dairy industries. Apart from this, market linkages were also sought for the exports of India's service sector. Failing to accept these terms, India has had to withdraw from the world's largest regional trade agreement. Providing protection to various industries of the country remained to test the way of easy connection in RCEP.

Due to lack of competitiveness on the export front, India is facing obstacles in getting foreign trade through free trade agreements. In such a scenario, if India is to become a five trillion economy by 203, it will have to join the Foreign Trade Agreement, which our policymakers are slowly beginning to understand.

There are constant fears that the FTA will adversely affect the domestic industry. It is true that FTAs ​​benefit Indian exports, but in some cases the benefits accruing to India are greater than the benefits to the other countries with which India has previously entered into trade agreements. Experience has shown that the FTA has resulted in significant negative effects. Due to the liberal policy in the FTA, the government will have to ensure that imports from major trading partners do not skyrocket and exports do not decline when the new FTA is signaled. So that our trade deficit with that country cannot increase. Rather than being isolated from the rest of the world by FTA, Indian businesses, especially export-oriented ones, will have to find a way to maximize their profits. Experience the impact of the previous FTA on India's domestic industry and how it has benefited exporters will have to be applied in the new FTA.