India is emerging as a key economic power as it takes several steps toward integrating with the global economy and shedding its cautious approach toward trade agreements. Let’s find out about some of the key challenges for India in concluding any trade agreement.
Labour and Supply Chain
We are negotiating with every key trading partner including European Union, in which sustainability and labor issues remain very important. In fact India-EU free trade talks were hampered over the labor issues which remains a bone of contention.
The key issue of the supply chain is symbiotically linked to trade. India has to take concrete steps if it wishes to integrate with the global economy. In the last 15 years, China has been at the center of the global supply chain. But the cost factor has gone up in China. China’s belligerent behavior and other geopolitical tensions have made many countries and companies think to diversify. India has ambition we are trying to attract companies to start manufacturing base in India.
In the last one year, India’s cautioning approach toward trading agreements is changing. We are now more open to trade agreements. It is part of the Indian leadership’s vision to integrate with the global supply chain in terms of both exports and imports.
Another issue of disagreement is the food subsidy given by India. India does not need to completely abandon it. In fact many of the developing world faces this issue. Many of these countries look to India for raising their voice at the multilateral forums. So this issue is in the larger interest of India which gives it a pivotal point to advocate for other developing nations.
However, if India wishes to grow at the rate of 7-8 percent, for which it is needed to have external finance and an external market. It is important that the nations with which India has large economic interests whether it’s the USA, Europe, some of the Asian countries, or China. If we have to ink any trade agreement with them then these issues assume great significance.
Indo-Pacific Economic Framework
Indo- Pacific Economic Framework For Prosperity Ministerial Meet took place recently which comprises 14 countries all belonging to the Indo-Pacific region. The grouping contributes to 40 percent of global GDP, and 28 percent of global trade. Joining it from the beginning has ample benefits for India.
India engaged very exhaustively in several streams of discussion from the supply chain, tax reform, and anti-corruption to clean energy. However, due to possible binding commitments on labor, environment, and digital trade, New Delhi opted out of its trade pillar.
This framework gives the option to the member countries to not participate in all pillars. India has joined three pillars- supply chains, tax and anti-corruption, and clean energy but on the trade pillar, it had a disagreement which consists of issues from labor to environmental standards, digital trade, and public procurement.