He stressed that trade always had advantages and disadvantages, and that trade policy measures should aim to take advantage of positive gains and minimize negative consequences.
The panel discussion saw a number of eminent experts present the concrete steps required for India’s trade policy reform. “We want to design a practical roadmap for the government to deliver the trade policy that India needs,” said Pradeep S Mehta, Secretary General of CUTS, who led the session.
In his opening remarks, Naushad Forbes, co-chairman of Forbes Marshall, said India’s economic history makes a strong case for free trade. He said India should seek to join more free trade agreements (FTAs), while learning from its experiences with past FTAs.
Forbes also called on Indian industry to more clearly articulate its interest in free trade and for that voice to be heard by policy makers.
Martin Wolf, chief economics commentator at the Financial Times, noted that changes in the global trading environment did not mean the end of trade, but in fact these changes had themselves created huge opportunities.
For India to take advantage of this and fit into global value chains (GVCs), it needs to think clearly about services, including digital trade, reduce formal and bureaucratic trade barriers and accelerate skills acquisition. and integration into the global knowledge pool.
Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission of India, stressed the need to have a clear tariff policy, backed by an exchange rate policy, to help achieve greater trade.
Ahluwalia also recognized FTAs as tools not only to improve market access for exports, but also to stimulate reforms at the national level. He suggested that India be open to further integration behind the border which is part of the new FTAs.
While some participants saw trade policy and industrial policy as inextricably linked, others sought to draw a distinction between the two. The importance of attracting investment and achieving a scale that boosts competitiveness and encourages businesses to focus beyond the domestic market were mentioned as steps to boosting both trade and growth. Many have pointed to the need for India to lower tariffs on industrial products and address anomalies in tariff policy, such as inverted tariff structures.
In the same vein, many calls have been made for India to participate more actively in FTAs. However, there were also dissenting voices, which stressed the need to fully understand India’s experience with past trade agreements before adopting new ones, and to take fully into account concerns about the effects of liberalization of trade in sensitive sectors such as agriculture and dairy products.
Other comments focused on the need to ensure internal trade integration, a prerequisite for better international trade outcomes. This would require greater involvement of state governments and a more coherent mechanism at the national level to implement trade policy.
Since trade policy can generate both winners and losers, the importance of policies aimed at retaining those who are most vulnerable to the adverse effects of trade was also discussed.
The need for greater political will, commitment to national reforms, focus on MSMEs, increased adoption of technological solutions and a comprehensive FTA strategy, are some of the other priority policy areas that were raised during the discussion.
