In the changed world due to Corona epidemic, India will also gradually make a big change in its trade policy. India’s effort will be to promote trade on a bilateral basis after joining a Free Trade Agreement (FTA) with groups of countries. After the period of economic liberalization, the image of India has become that of an import hub.
In the recent past, when India indicated not to rejoin the Regional Comprehensive Economic Partnership (ICEP), it was seen as being linked to the ongoing tension along the Line of Actual Control (LAC) with China. Whereas the reality is that the government is concerned about the loss of profit over the free trade agreement with such groups.
According to the source, this strategy is linked to the Prime Minister’s vision of self-reliant India, with an emphasis on reducing imports and increasing exports. The hypothesis is that prior to the nineties, the areas of which we were self-sufficient in manufacturing and currently the areas in which we can be self-sufficient in this direction, are the areas to be selected first.
Imbalance in import and export increased
Imbalances in imports and exports have increased rapidly in the country for the last two decades, leading to trade deficit. Since the policy of liberalization in the nineties, India became dependent on imports in many areas in which it was widely recognized. For example, India also depends on China for raw materials for medicines and yarn of Banarasi saree.
Now what will be the strategy next
It is currently under review. The consensus is that we will not do free trade in future with those groups of countries, so that our imports will increase further. This will happen only in case of high export potential.
Due to the global economy in this epidemic, the rich countries are also adopting protectionist policy. Obviously, in such a situation, the emphasis of countries will be less on imports and more on exports. On Monday, Foreign Minister S Jaishankar also indicated major changes in trade policy. He had said that free trade has not been a big deal for India. To keep in touch with the world, it is not necessary that only free trade should be adopted.