India should use the churn in the global economy to strengthen its economic competitiveness, and then enter agreements such as RCEP on a firm footing. Comment (200 Words)
Refer - The Hindu
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IAS Parliament 3 years
KEY POINTS
· The economic downturn due to COVID-19 has forced countries to take aggressive measures to support households and businesses within their borders. Naturally, at such a time, commitments to market access have likely dropped in priority. India is no different as policymakers try to steer the economy from an expected contraction with an eye on “self-reliance”.
· The deep differential in value-added between imports from China (mostly manufactured products) and exports to that country (mostly primary or intermediate products) has also been a worry.
· What has also riled India often is restricted access to the Chinese market for India’s globally competitive sectors such as pharmaceuticals and services. This trade distortion, in India’s view, has happened even without an FTA with China.
· So, Indian policymakers’ fear that being part of any trade agreement involving China may lead to a further inflow of goods, thereby hurting Indian firms, is a genuine concern. While the RCEP has some safeguards, they fell far short of India’s demands such as on ‘country of origin’ rules and automatic tariff mechanisms.
· Despite efforts over the years, including the recent ‘Atmanirbhar Bharata Abhiyan’ initiative, the share of manufacturing in India’s economy has been on a broad downward trend since 2007 and was just 15.4 per cent in 2019. To raise this figure, India needs to link up with global value chains and then move up that value chain. And to do so, the country needs to get more competitive; shying away from competition will not help.
· In the World Economic Forum’s (WEF’s) global competitiveness index, India ranks 69 out of 141 countries, far below emerging market peers such as China (28) and advanced ones such as Singapore (1) and Japan (6).
· Efforts to enhance competitiveness should also go together with those to augment existing trade relations. Arguably, India has not had a great run with FTAs with the preference utilisation rate—a metric for the efficiency of trade agreements—moderate at best. That needs to change, starting with more trade and investment links with Japan and South Korea. It is also time to engage more with key democracies in Europe and the Americas.
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IAS Parliament 3 years
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Answer writing practice 3 years
Answer practice 4 years
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Sathish Kumar 4 years
