28 May 2015

A Stocktaking of India’s Trade Policy: Past, Present and Future

A conference on India’s trade policy, past, present and future, jointly organised by the WTI and Jindal Global Law School, O.P. Jindal Global University has taken place in Delhi. It was attended by academics from leading institutions, senior policy makers, trade law practitioners, and representatives of civil society and private industry.

Delivering the conference’s keynote address on 21 May, WTI Managing Director Prof. Joseph Francois emphasised the need to change trade policies, as “the rules we need today are not the ones we agreed 20 years ago”. With firms producing in multiple locations, the fragmentation in production and resulting growth of global value chains raise important new challenges for trade policy-makers, ones which India confronts like all major trading nations. 

Dr. Arvind Panagariya, Vice-Chairman of NITI Aayog, a government think tank devoted to the process of structural transformation, chaired the opening session on “The Role of Trade in Unleashing India’s Economic Potential”. In his remarks, Prof. Panagariya recalled the strong correlation between trade openness and GDP growth. He spoke of the lack of an efficient domestic infrastructure and transport as major obstacles impeding trade growth. Speaking on the country’s trade policy formulation process, he noted that India still struggled with a lack of coherence between its domestic policies and external commercial policies. “A comprehensive policy needs to be strategised in order for India to achieve the economic momentum it deserves and is capable of sustaining,” he said.
Former WTI Managing Director Prof. Thomas Cottier spoke in a session devoted to “India’s Intellectual Property Landscape”. He stressed that Intellectual Property Rights (IPRs) are a precondition for fair trade and that the implementation of IPRs should also be addressed from a competition policy perspective, an area where India should take a leading role among developing nations. 

In the session on “A Services Miracle? Does India Confront a Risk of Premature De-industrialisation”, Dr. Anirudh Shingal, Senior Research Fellow at the WTI, documented India’s remarkable services growth story and situated it in an international context before discussing the implications of the sector’s growth on convergence across states within the federal nation. Dr. Shingal stressed that the challenge for India would be to streamline its excessive regulatory framework in services and to make services growth more employment intensive. 

Prof. Abhijit Das, Head and Professor, Centre for WTO Studies, Indian Institute of Foreign Trade (IIFT), spoke in the session on “India’s Participation in Global Value Chains”. He recalled that mere participation in global value chains was not the objective, rather what mattered was evidence of continuous upgrading along value chains. 

Pierre Sauvé, WTI Director of External Programmes and Academic Partnerships, chaired the conference’s closing session, directing a number of questions to a distinguished set of panellists on some of the key trade governance challenges facing India in the years to come. Among these was the question, evoked repeatedly throughout the two days of lively discussions, of the interplay between domestic reform efforts and the role assigned to trade and investment policy.

Most panellists concurred that addressing key domestic growth bottlenecks - enhancing educational performance and physical infrastructure, raising agricultural productivity, tackling inter-state barriers to commerce and improving the  country’s overall doing business environment – would likely command greater attention in policy circles, with trade and investment law and policy pursuing India’s increasingly assertive market opening needs abroad whilst also encouraging greater doses of inward FDI under the Modi government’s ‘Make in India’ initiative. Often regarded as a reluctant multilateralist in trade policy circles, several participants expressed the hope of seeing India assume a more resolute leadership role in the WTO.