Global Economy

FTAs have not served India's economy well: External Affairs Minister S Jaishankar


The free trade agreements (FTAs) that India entered into over the years have not been able to largely serve the country’s economy well in terms of building its capacities, though all such pacts are not the same, External Affairs Minister S Jaishankar said on Monday. The external affairs minister said there are ways of engaging the world which do not necessarily have to be “FTA-centric”.

Jaishankar made the comments during an online interaction with leading industrialist Sunil Kant Munjal and strategic affairs expert Prof C Raja Mohan on CNBC-TV18.

Replying to a question on New Delhi’s ties with neighbouring countries, he said it is a complex neighbourhood and India is often like a “punching bag”, adding creation of structural linkages could address the problem of “volatility” resulted by domestic politics of the countries.

Elaborating on his views on FTAs, Jaishankar said:”The fact is that they have not served the economy well in terms of building our capacities. I think there are ways of engaging the world which do not necessarily have to be FTA-centric,” the external affairs minister said.

He, however, added that all the FTAs are not the same.

“Look at the state of the economy, look at the state of the manufacturing then look me in the eyes and say yes these FTAs have served me well. You won’t be able to do that,” Jaishankar said during the discussion on geopolitics of opportunities.

He said post COVID-19, the world is heading towards a more protectionist economy.

When asked about non-alignment and the current geo-politics, the external affairs minister said it was a term of a particular era and particular geopolitical landscape.

Noting that India maintains a strong streak of independence in its foreign policy, he said today people turn to the country as part of solution, as it has been a key player in dealing with all major global issues and challenges like maritime security, climate change and terrorism.

“If we are to grow by leveraging the international situation, then you have to exploit the opportunities out there,” he said.

“Either you are in the game or you are not in the game…. I would say that the era of great caution and a very much greater dependence on multilateralism, that era is to a certain extent behind us.

“We have to step out more, we have to be more confident, we have to articulate our interests better, we need to take risks because without taking risks like in business or in banking, you cannot get ahead. Those are the choices we have to make and I think there is no getting away from it,” he

To a question on the neighbourhood, he said the relations at times are impacted by the interplay of politics and sharp positioning.

“We need to create those structural linkages between us and our neighbours so that they they care of political cycles and any volatility their politics may produce,” he said.

“Because, very often people say things about us. We are actually like a punching bag and the domestic issues which one of our neighbours is having,” Jaishankar said in an apparent reference to Nepal.

“I would say the sensible thing to do is to make sure that you have strong structural linkages so that the politics of the day plays on, but the realities of the economics and the social interactions and the people to people contacts… that carries on.

“Having said that I would take a lot of care with my neighbours to kind of smoothen the frictions as they come along. Sometimes you anticipate problems, sometimes it is important that you do not get provoked,” he said.

About China, he said the economies of India and China were roughly of the same size when the then prime minister Rajiv Gandhi visited Beijing in 1988.

However, now, China’s economy is about four-and-half or five times that of India largely due to a series of reforms the neighbouring country initiated around 40 years back.

He said India too grew “fairly significantly” during the period.

“The fact that we did not intensively industrialised, or pushed manufacturing the way many other Asian economies did. The fact that we opened up very much later, we opened up a full decade-and-half after China did,” he said.





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