Home Agenda A six-point program for India to improve its trade competitiveness

A six-point program for India to improve its trade competitiveness


In a recent joint article, Indian Trade Minister Piyush Goyal and Australian Trade Minister Dan Tehan wrote that the new trade agreement between our two countries will lead to the creation of new jobs. This agreement follows a similar agreement with the United Arab Emirates, and others are in preparation. It is hoped that such deals will push the boundaries of India’s competitiveness and make good use of our demographic dividend. It goes without saying that exports lead to higher growth.

In a white paper on “Enhancing Competitiveness for Inclusive Growth”, CUTS International, the Institute for Competitiveness and the Institute for Industrial Development Studies set out an agenda for action to improve Indian competitiveness. The exercise took place over seven consultations with stakeholders, as there were many points to work on. Let me recall the top six that can make a big difference.

We need better and greater investment in intangible assets such as health and education, accompanied by building “future-proof” skills. These issues need to be worked on by the States in partnership with the Union government, in terms of policies and funding. However, one size does not fit all. Therefore, states must be allowed to design their own strategies. They should leverage the potential to promote people-centred public-private partnerships to raise funds to cover health, jobs and skills, and ensure effective implementation in consultation with all stakeholders. Samaj, sarkar and bazaar must come together for this purpose.

The Niti Aayog conducts comparative studies on several topics across states, such as health, sustainable development goals, innovation, and export readiness. Hopefully these would lead to better results through inter-state competition. It would also be good for States to come together and create their own association to exchange information on good practices and lessons learned. It would give them a better sense of belonging. Similar bodies exist in other federal countries such as the United States, Nigeria and Australia. We need to focus on our third level of governance, empowering district governments to realize the potential of our districts .

Second, free trade agreements (FTAs) will help our industry participate in supply chains. Therefore, intra- and cross-industry cooperation and participation at company level is also necessary without violating competition law. Our FTAs ​​should complement production-related incentive programs so that products promoted domestically can be globally competitive. We also need to rethink our decision to join the Regional Comprehensive Economic Partnership; otherwise, supply chains from that part of the world would not be attracted to India except in specific cases. We are losing an opportunity. After all, most of our requests for long-term commitments in this agreement had been granted.

Third, we must promote fairer competition by implementing the draft national competition policy. Among other things, the policy advocates a level playing field for all players, thereby promoting economic democracy. It also encompasses Ease of Doing Business (EODB); that is to say, the removal of barriers to entry, for which the Ministry for the Promotion of Industry and Internal Trade has prepared a comparative index between the States. Those who score well on the EODB create more jobs. The only problem is that it doesn’t talk about the smooth running of a business. Inspector raj continues in most areas, extracting his pound of flesh from businesses and thus increasing their costs. To counter this, we need a strong anti-corruption law with restitution provisions so that perpetrators cannot get away with ill-gotten riches.

Fourth, we must modernize and strengthen the capacity of our public institutions. We know the issues on which a lot of work has been done in the past through administrative reform commissions. Someone has to dust off those reports. Fortunately, this government is already carrying out certain administrative reforms, such as the side entry of experts. This must be extended to cover side exits through rigorous periodic evaluations aimed at ridding the system of fat.

Fifth, there must be a “whole of government” approach monitored by policy coherence units in the offices of the Prime Minister and Chief Ministers of states. In addition, many policies work against the grain. For example, a lack of cohesion between our trade and industrial policies has often resulted in inverted duty structures. This is despite the fact that the two come under the same ministry.

At the same time, the tendency of utilities to write new laws and rules and retain old ones should be checked by institutionalized assessments of the impact of regulation involving three tests: a) legality b) necessity and c) proportionality . Only if they pass all of these tests should they be retained or introduced, if not discarded.

Finally, we must plod along with a shared vision, mutual learning and a single market. The country must implement cooperative federalism in letter and spirit. We will all need to work diligently to ensure that our demographic dividend is not wasted. The Niti Aayog is planning a new index to rank states on competitiveness. These six indicators could be a good starting point.

Pradeep S. Mehta is Secretary General of CUTS International

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