India’s trade stance remains a little too protectionism happy

Source- The post is based on the article “India’s trade stance remains a little too protectionism happy” published in the “mint” on 7th April 2023.

Syllabus: GS3- Indian economy

Relevance– Issues related to trade policy

News– Recently, the government unveiled a new Foreign Trade Policy

What are issues with the recently released new trade policy?

The policy is a recitation of the laws and processes that regulate Indian trade. It makes no real effort to engage with the policy issues at stake.

No attempt has been made to explain how New Delhi views global economic systems and India’s place in them.

Multinational companies are reorienting supply chains to reduce their dependence on China. India is a more reliable commercial partner for the West. Trade policy does not contain the strategy for relocating supply chains to India .

It is not looking for ways to build trust with trading partners such as Japan.  how to share the burdens of global sourcing and supply to promote a shared economic security.

What are the reasons behind lack of focus on trade related issues among policymakers?

India’s approach to trade remains incoherent and contradictory. Indian policymakers no longer seem to believe India can become a great trading nation.

Policymakers at the highest level are keen to debate geopolitical shifts. But in case of trade, decision-making is left to middle-level bureaucrats or to chambers of commerce. This is odd because geopolitics and trade policy have become intimately connected today.

What are other issues with the foreign trade strategy of India?

India is offering halfhearted incentives for manufacturers to shift their operations to India. It is offering $10 billion for semiconductor subsidies while the US plans $40 billion.

There is a lack of political will. They cannot promise that India will become part of the redirected, resilient supply chains that investors in Japan and the West want to build.