India Should Go All Out In Its Westward Trade Push

Context: Mutually assured flexibility on tariff concessions would help India and its Western partners score economic gains and also counterbalance China’s growing dominance of world trade.

Background: India’s westward turn -

• India-UK Roadmap: For the rest of this decade, India and UK have committed towards a ‘comprehensive strategic partnership’ aimed at greater engagement in areas like economic affairs, defence and health.
  • Both have signed a £1-billion trade investment pact and is expected to generate jobs in both countries.
• India-EU: Talks to resume stalled negotiations for the India-EU trade deal.

Significance of these developments

• Compensating for the refusal of Regional Comprehensive Economic Partnership (RCEP): Our rejection of RCEP, which covers much of the eastern hemisphere, had exposed us to the risk of losing out on cross-border commercial relations in a highly dynamic part of the world.
• Emphasis on exports in India’s drive towards self-reliance: the US, UK and EU offer much potential for trade expansion in this regard.

Challenges ahead

• Tariff negotiation: While the west wants India to lower import duties, the Centre has been raising for the past half-decade and negotiating it as sovereign right to protect domestic businesses under the World Trade Organisation.
• Extended effects of financial crisis of 2007-08: Already constrained trade growth last decade.

Way forward: Opening up markets to imports in lieu of easier access to foreign ones

• Need for a broad cost-benefit analysis to guide talks: India could accede to UK’s demand for lowering tariffs on Scotch Whisky, EU’s demands on drinks, food items and vehicles etc.
  • In return, India could bargain for the relaxation of US visa rules that affect software exports.
• Leveraging geopolitical convergence: Fuelled by West’s intention to keep a check on China.
• Expanding strategic ties and technology transfer:g. UK’s Rolls-Royce inked memorandum with Hindustan Aeronautics Ltd for warship engines.