There is a strong need for India to connect to the global market and the Make in India campaign is helping India adapt to the changing demand scenario in the world today. This was stated by Mr Rajeev Kher, Commerce Secretary, Ministry of Commerce and Industry, Government of India at a Conference on “Expanding India’s Share in World Trade: Manufacturing Revival Holds Key” organized by Confederation of Indian Industry (CII), Ministry for Foreign Affairs, Sweden and Embassy of Sweden in India in New delhi today.
Mr. Kher pointed out that India has 1.4 – 1.5% global share in merchandise exports, 3-3.5% global share in services exports and about 1.7-1.8% composite share. He added that India’s merchandise trade reached $764 billion in the current fiscal year making it $1 trillion taking into account the services exports.
Mr. Kher observed that global dynamics were changing. The European Union is on the decline. Africa continues to grow. South East Asia is growing at moderate rate. Japan continues to struggle to revive its economy. China’s growth is halting. Interestingly, small trade share with Central Asia and Latin America shows India’s potential to increase trade with these regions. He felt that India needed to adapt to these changes and produce goods which could be exported to the regions exhibiting growth and it was in this backdrop that he felt that the Make in India campaign was very timely.
Highlighting some of the government’s initiatives, the Commerce Secretary stated that India is creating foreign trade policy eco-system to foster trade. He called for a change in mindset in India. He was of the view that the tariffs mental bloc has to change. While tariffs do play a role, it is only part of trade policy.
The Commerce Secretary suggested that the value chain approach needs to be brought in to spur competitiveness in tariff structures. He stated that Indian companies should also look at other countries to fragmentize manufacturing activities and harness competitiveness. Locational advantage is crucial to being part of Regional Value Chains or Global Value Chains. In this context, he suggested that Indian companies could look at investing Cambodia-Laos-Myanmar-Vietnam (CLMV) region.
Mr. Kher pointed out that over the last few months, the Indian manufacturing sector has been showing erratic behavior. According to him, the sector needed some stability and hoped that the slew of infrastructure development initiatives that had been undertaken would help give a boost to the sector.
Mr. Kher also observed that the role of services sector in manufacturing cannot be undermined. He felt that ease of doing business is another important component that would ensure better manufacturing growth. Undertaking measures to promote trade facilitation would also help provide a boost to this sector.
In his speech, His Excellency Mr Joakim Reiter, Deputy Director General and Head of the International Trade Policy Department, Ministry for Foreign Affairs, Sweden said, “To propel India’s manufacturing growth, domestic and external sector reforms are needed. Countries need to embrace Regional and Global Value Chains. Countries are investment takers. The idea of high tariffs and investment coming in may work in a limited sectors and limited time. But in the long run, competitive rules will attract investments. So countries should focus to develop right ecosystem for investments to thrive not on incentivizing short term investments.”
Mr Harsha Vardhana Singh, Former Deputy Director General, WTO was of the view that that trade facilitation and other reforms needs to be compressed into a shorter time frame. The trade policy discourse in changing among industry and governance structures. He also pointed out that India needs differentiated IPR policies. China is now focusing high-tech and high-quality products to be part of high value chains and thus coming up with state of the art IPR. Effective protection and infant industry arguments would need to be challenged. Even in finished goods, competition is required, he added.
Mr Pravir Kumar, Director General of Foreign Trade, Ministry of Commerce and Industry, Government of India stated that India has gained a position of strength in services. However, the corresponding growth has yet to be achieved in the manufacturing sector. Jobless growth has its limitations given India’s young and growing population. It is estimated that 1% manufacturing growth can create 30 million new jobs. Manufacturing sector will also lead to equitable growth where the fruits are enjoyed by all. Development is sustainable if it includes the lower strata of society.
Mr Kumar added that the government has incorporated digitization. Businesses can apply online for IEC code and within 2 days it would be processed to promote young entrepreneurs to enter the trade field.
Sharing his thoughts on the issue, His Excellency Mr Harald Sandberg, Ambassador of Sweden to India said, “Sometimes, simple measures make huge difference. In my opinion, competition is important. It doesn’t mean free market with no rules but competition under rule of law, free rule based system where rules are predictable and apply to all. Industrial growth is achieved through competition. A typical car produced in Sweden has about 50% foreign value addition.”
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