New Delhi, April 05, 2014
He was delivering the 17th CUTS 30th Anniversary Lecture on “India’s Export Competitiveness, Prospects & Challenges: The Role of Trade Policy”. It was organised here yesterday evening in partnership with the Federation of Indian Chambers of Commerce and Industry (FICCI). More than 80 participants representing various interests participated.
“Foreign trade has to be looked as a composite economic activity as against in silos. Various government departments and the state governments need to work in tandem. The foreign trade policy should have strategic objectives to address, should be contextualised and not just an amalgamation of a set of instruments towards export promotion”, said Mr Kher.
“Exports should no longer be considered as a function of surplus generated over and above domestic consumption. It should be an intrinsic part of a vibrant economy. Imports also play a very important role because more than 60 per cent of our imports are intermediaries to manufacturing. Intra-industry trade is growing,” he added.
Welcoming the participants, Dr A Didar Singh, Secretary General of FICCI, said: “There should be synergy between trade in manufacturing and services.” He underlined the value that consumer advocacy groups like CUTS bring to the trade policy discourse of India, and recalled that FICCI and CUTS have a long partnership working on these issues.
Three decades of working globally on trade and development
In his welcome remarks, Mr Pradeep S Mehta, Secretary General of CUTS International, outlined the journey that the organisation had undertaken over three decades including the crucial role that it is playing as a pro-trade, pro-equity voice in Geneva, the headquarters of the World Trade Organisation and in promoting South-South cooperation through its three centres in Africa and two in Asia.
Mehta highlighted why foreign trade should play a much greater role in transforming India’s manufacturing base from low to high value products and its overall contribution to the growth and development of the Indian economy.
Whole of government approach needed: Pradeep Mehta
“We need a whole-of-government approach to trade policy-making and it should be a crucial cog in the wheel of generating 100 million new jobs over the next five years as visualised by our National Manufacturing Policy and Plan,” he added.
Chairing the event, Ms Lise Grande, Resident Coordinator of the United Nations in India, said: “For India to grow faster and improve its competitiveness, continuous enhancement of its entrepreneurial and intellectual capacity is an imperative. India needs to further diversify its product mix.”
Speaking on the occasion, Mr Ajay Shankar, Member Secretary of the National Manufacturing Competitiveness Council emphasised on the importance of economies of scale in India’s production structure to be able to enhance its competitiveness.
Shying away from labour reforms: Ajay Shankar
In this context, Mr Shankar said: “Why are we shying away from labour reforms? We need to look at all cognate issues of the country’s competitiveness and a national consensus is needed for creating new jobs and going up the value chain of production.”
“There should not be any dichotomy between domestic and global competitiveness issues. We need to get right the sequencing of reforms with right safety nets including trade adjustment programmes”.
Talking about free trade agreements (FTAs) that India has negotiated with some of its major trading partners in East and South East Asia in recent years, Mr Kher said: “Indian industry should make full use of them as they will serve as vehicles to enter the global value chains of major products and services of India’s interest.”
“India is likely to be adversely affected by mega FTAs such as the US-led Trans-Pacific Partnership agreement and, in this context, successful negotiations of the Regional Comprehensive Economic Partnership agreement in the Asia-Pacific region can be a potential game changer,” he added.
“India needs both locational and product diversification of its trade composition. Strengthening of regional value chains should be a stepping stone for getting into global value chains.”
The Lecture was followed by a round of lively discussion. Questions ranged from the need for generating more awareness among the Indian industries about advantages that the country can draw from its FTAs to relationship between standards and job creation to the role of exchange rate management for enhancing trade competitiveness. There was a broad consensus that the forthcoming foreign trade policy, which is due to be announced by the new government, should have clear objectives and roadmap for mainstreaming trade into India’s national development strategy.
A strong institutional mechanism for greater engagement of other relevant departments and state governments should be in place so that there is coherence between trade policy and other major macroeconomic policies.
“We need to activate the Interstate Trade Council, established in 2005, which has never met”, said Mehta in response to a query on engaging states.
CUTS International is pursuing consumer sovereignty through evidence-based policy- and action-research and advocacy on cognate subjects of trade, regulations and governance issues for enhancing consumer welfare through job creation and poverty reduction. It has become a Southern voice of consumers through its activities across Asia and Africa