India should boldly join key trade blocs

There is welcome turnaround on trade; merchandise exports have surged 57% during April-September to add up to $197 billion, and seem likely to exceed the target of $400 billion set for the year. But note that global trade in goods is now estimated at $17 trillion and rising, and we need to take advantage of the buoyant conditions to strike mutually beneficial trade deals with our main trading partners. India must confidently join large trade blocs such as Regional Comprehensive Economic Partnership (RCEP), a free-trade pact among 15 Asia-Pacific nations signed late last year, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which also includes Canada, Chile and Mexico.

In parallel, we do need to arrive at trade pacts with the EU, the US and Britain sooner than later. The policy objective ought to be to proactively boost trade and duly shore up internal efficiency, and also to gainfully engage with the world as a rising regional power. The recent upsurge in trade may be due to recovery from the pandemic and restoration and readjustment of supply chains. But to sustain exports growth, we need to enlarge our product basket and explore new geographies. We cannot afford to walk away from RCEP, which is dominated by China, and simply disengage from the world’s most dynamic region. True, there are strategic issues to take into account post-Galwan, and continuing tensions along the Line of Actual Control. Yet, India’s long-term interests would require that we boost trade openness for clear-cut gains. The recently launched GatiShakti scheme streamlines logistics to enable efficient trade.

Items that comprise 70% of world trade make up a mere 30% of our export basket. Hence the pressing need to put in place forward-looking policy to enhance competitive advantage in the manufacture and export of electronics and other sophisticated products and services, even as we seek to increase exports in apparel, gems and jewellery and other items. A strategic trade policy would make eminent sense.


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