The challenge posed by the proposed mega-regional trade pact — the Trans-Pacific Partnership (TPP) — will impact India’s exports significantly and the country would do well to make a concerted all-round effort to prepare for and undertake domestic market reform and push for not just export of manufactures but also of services and agricultural products, Suresh Prabhu, Minister for Railways, said here today.
Speaking at a conference on “Changing Global Economic Scenario: Implications for India’s Trade Policy and Make in India Programme” , organized by Ficci, Prabhu said, “Change is inevitable and we have to change ourselves with the impending change” in the global economic architecture.
“We need to find out how to create a legally binding framework where every country is a winner,” he added.
Prabhu said that in the emerging global economic environment, domestic reforms would be the key to improving product standards, manufacturing and services delivery. Such an approach was vital remain competitive in the global markets as the US was fast tracking the finalisation of TPP.
The TPP is being pushed by the US for greater trade with Asia Pacific countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam (representing 40 percent of global GDP), and negotiations are on.
Rajeev Kher, Commerce Secretary, said that India must recognize the emerging challenges from the mega regional agreements currently under negotiation, and start preparing right away. He added that the need of the hour was to rev up the domestic economy keeping in mind a long term growth.
Amitabh Kant, Secretary, Department of Industrial Policy & Promotion (DIPP), said that India was the least integrated amongst the developing economy, hence was not being able to become an effective part of the global supply chain. He added that mega regional agreements such as Trans Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) would lay down new standards and disciplines for global trade which would be highly competitive.
Speaking about ‘Make in India’, he said that in a globalized world India had to become a part of the global supply chain. To achieve this, it was necessary for the country to grow in double digits, drive its manufacturing sector and exports had to grow at more than 20 per cent for a long time.
Arvind Subramanian, Chief Economic Adviser, Ministry of Finance, pointed out that India’s exports had stagnated and experiencing reduced buoyancy. He said that there was a need for structural transformation and suggested that those sectors should be focused which have five desirable features – high level of productivity dynamism or growth in productivity, resource re-allocation, alignment with competitive advantage and tradability.
Subramanian said that India needs exports at all costs and added that ‘Skill India’ should complement ‘Make in India’.
Abhijit Das, Professor and Head, Centre for WTO Studies, said that the secrecy around mega regionals has raised suspicion. TPP negotiations would be finalized in a couple of months and would tend to polarize trade. Therefore, India needs to bring in reforms so that it has not excluded from these agreements.