India is dangerously close to becoming an also-ran
Skip to main content
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
The Business Standard

Tuesday
February 07, 2023

Sign In
Subscribe
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
TUESDAY, FEBRUARY 07, 2023
India is dangerously close to becoming an also-ran

Analysis

Mihir Sharma
18 September, 2019, 12:05 pm
Last modified: 18 September, 2019, 12:17 pm

Related News

  • Indian police arrest 28 Bangladeshis at Agra slum
  • Oil’s New Map: How India turns Russia crude into the west's fuel
  • Indian watchdog tells investors markets stable despite Adani rout
  • US FDA says India-made eye drop linked to some infections, blindness and one death
  • Adani crisis not going to be indicative of how well Indian financial markets governed: Finance minister

India is dangerously close to becoming an also-ran

The belief that India has “lost” in most of its trade agreements is pervasive here

Mihir Sharma
18 September, 2019, 12:05 pm
Last modified: 18 September, 2019, 12:17 pm
India is dangerously close to becoming an also-ran

India's government will shortly find itself at a fork in the road. Will it choose globalization and export-oriented growth? Or will the isolationists in the ruling Bharatiya Janata Party win, and keep India out of a giant Indo-Pacific trading bloc?
This weekend, New Delhi hosted negotiators for the Regional Comprehensive Economic Partnership – from the 10 members of ASEAN as well as Australia, New Zealand, Japan, South Korea and China – in the hope that it could swing last-minute safeguards for some of its producers. Indian officials have stalled RCEP's progress as much as they could, and the others are now losing patience. One way or another, the deal will have to be concluded by November, when the leaders of the 16 RCEP countries will meet in Bangkok. Malaysia's Mahathir Mohammed, not a man known for patience, said in June that the other countries could go on without India, if necessary.

Many in New Delhi, even within the commerce ministry, would be relieved to see that happen. The belief that India has "lost" in most of its trade agreements is pervasive here. Influential lobbies tied to the country's laggard producers are happy to remind officials how trade deficits soared with members of the Association of Southeast Asian Nations after a free-trade agreement was signed some years ago, for example. And there has always been a strong isolationist wing within the Hindu nationalist BJP – right-wing ideologues don't just want India out of RCEP; they would prefer existing agreements with Japan, Korea and ASEAN be renegotiated, if not abandoned.

Of course, India can only be said to have "lost" if you ignore the considerable gains to consumers from cheaper imports. Once upon a time, Indian households had to worry constantly about high and variable prices of cooking oil. That's no longer a concern, thanks to imports of palm oil from Indonesia and Malaysia, in spite of the steep duties permitted by the Indo-ASEAN free-trade agreement. And when producers' lobbies complain about losing market share to Southeast Asia, they merely underline how uncompetitive Indian industry has become.

There is, in fact, a far better reason than any of these for India to feel doubtful about RCEP, and it's geopolitical more than economic. For Beijing, the trading bloc is just another method to ensure that the People's Republic embeds itself as the hub of Asia's economic geography. That's not something anyone in India is comfortable with. India runs a massive trade deficit with China, of course; but, even more than that, officials here are conscious that concluding RCEP in the middle of the Sino-US trade war would be a boost to Beijing. The problem is that all options for New Delhi are unappetizing. If only there was a large and comprehensive alternative to the RCEP that excluded China — but, of course, President Donald Trump has killed the Trans-Pacific Partnership, leaving Beijing in control of the future of Asian trade.

In the end, though, it's hard to see how India would be best served by turning its back on RCEP. In spite of his pro-trade rhetoric at places like Davos, Prime Minister Narendra Modi's government has started putting up tariff walls in recent years, as early attempts to boost Indian competitiveness failed to show quick enough results. This turn to protectionism needs to be reversed, if India has any hope of employing the millions of young people graduating its schools every year.

It's true that signing a sweeping free-trade agreement would be a significant change in direction for a government that is most comfortable speaking a 1970s-vintage language of import substitution, industrial policy and protective tariffs. But Indian negotiators have already moderated their demands considerably. New Delhi has made it clear that it would be satisfied with a two-track agreement that keeps some walls up against Chinese imports while opening up to the other RCEP countries.

I'm still hopeful that, come November, Modi's signature will be on this agreement. If nothing else, it would be a massive humiliation on the international stage for him to stand aside as all the other leaders of the Indo-Pacific come together to declare a new era is dawning. So much of Modi's domestic popularity is wrapped around the carefully constructed myth of his international importance, that this might be seen as an unacceptable political hit. At least that's what we should hope the calculations within New Delhi's corridors of power are – because, if not, then India is condemned to long decades of being an also-ran on trade and growth.

Bloomberg Special / Top News

India

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • A man stands in front of collapsed buildings following an earthquake in Kahramanmaras, Turkey February 6, 2023. Ihlas News Agency (IHA) via REUTERS ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY. NO RESALES. NO ARCHIVES. TURKEY OUT. NO COMMERCIAL OR EDITORIAL SALES IN TURKEY.
    Deaths exceed 2,600 as catastrophic quakes ravage Turkey, Syria
  • 30% cos see double-digit growth even in hard times
    30% cos see double-digit growth even in hard times
  • Govt borrowing from commercial banks surges
    Govt borrowing from commercial banks surges

MOST VIEWED

  • The megaproject Rooppur Nuclear Power Plant has a debt of Tk90,474 crore. Photo: Courtesy
    Projects funded with debt need to be selected prudently, and implemented timely
  • Some tough tasks on the plate for Bangladesh Bank!
    Some tough tasks on the plate for Bangladesh Bank!
  • Having sufficient reserves, strong social security needed to be safe in bad time
    Having sufficient reserves, strong social security needed to be safe in bad time
  • Resilience should be built to cope with long-term implications
    Resilience should be built to cope with long-term implications
  • Why 2012 reforms were not done is a million-dollar question
    Why 2012 reforms were not done is a million-dollar question
  • Is the IMF to blame for growing pressure on your wallet?
    Is the IMF to blame for growing pressure on your wallet?

Related News

  • Indian police arrest 28 Bangladeshis at Agra slum
  • Oil’s New Map: How India turns Russia crude into the west's fuel
  • Indian watchdog tells investors markets stable despite Adani rout
  • US FDA says India-made eye drop linked to some infections, blindness and one death
  • Adani crisis not going to be indicative of how well Indian financial markets governed: Finance minister

Features

Photo: Collected

Get your partner a lovely present this Valentine's Day

19h | Brands
Pottery Wheel Craft Kit: A creative outlet for little hands

Pottery Wheel Craft Kit: A creative outlet for little hands

18h | Brands
Say it with Colours

Say it with Colours

1d | Mode
Photo: Courtesy

From 'Made in Bangladesh' to 'Designed in Bangladesh'

1d | Panorama

More Videos from TBS

Who will survive? Adani or Hindenburg?

Who will survive? Adani or Hindenburg?

10h | TBS Stories
James Gunn’s 8-10-year plan for the DC Universe

James Gunn’s 8-10-year plan for the DC Universe

10h | TBS Entertainment
LC issues lead to severe shortage of surgical equipment

LC issues lead to severe shortage of surgical equipment

13h | TBS Insight
Stage plays are going on in the digital age

Stage plays are going on in the digital age

18h | TBS Stories

Most Read

1
Leepu realised his love for cars from a young age and for the last 40 years, he has transformed, designed and customised hundreds of cars. Photo: Collected
Panorama

'I am not crazy about cars anymore': Nizamuddin Awlia Leepu

2
The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Photo
Economy

IMF approves $4.7 billion loan for Bangladesh, calls for ambitious reforms

3
Belal Ahmed new acting chairman of SIBL
Banking

Belal Ahmed new acting chairman of SIBL

4
Fund cut as Dhaka's fast-track transit projects on slow spending lane
Infrastructure

Fund cut as Dhaka's fast-track transit projects on slow spending lane

5
Photo: Collected
Startups

ShopUp secures $30m debt financing to boost expansion, supply chain

6
Photo: Courtesy
Panorama

From 'Made in Bangladesh' to 'Designed in Bangladesh'

EMAIL US
[email protected]
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2023
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - [email protected]

For advertisement- [email protected]