India's Bilateral Trade Agreements
India is actively negotiating seven bilateral trade agreements, marking a significant shift from previous skepticism. The catalyst for this change is largely attributed to Donald Trump's tariff policies. Trade negotiations with the US are a primary focus due to India's major business, technology, and foreign policy relationship with the country. Each agreement will vary, offering concessions based on strategic vulnerability.
Strategic Considerations and Global Context
- India aims to establish accords with the US and other nations like Britain, New Zealand, and the EU, signaling strategic direction.
- The economic landscape is increasingly digital, with a focus on data, ecommerce, AI, and supply chains.
- This shift could signal a move towards a world where WTO frameworks are less relevant.
Opportunities and Challenges
The potential outcomes of these trade negotiations are substantial, offering both tangible and intangible gains. India is focused on minimizing immediate impacts and safeguarding its current economic interests.
- Questions arise about the potential increase in exports and the implications for India's manufacturing sector.
- India's Production Linked Incentive (PLI) program has seen mixed success but remains crucial in addressing supply chain challenges.
Policy and Structural Changes
India acknowledges the need for policy evolution and structural changes to enhance competitiveness beyond subsidies. This includes:
- The deregulation commission and GST reset should progress alongside trade negotiations.
- A structural rethink is suggested, possibly separating the commerce ministry from the ministry of manufacturing and supply chains.
Overall, India's approach to trade and economic policy is becoming more pragmatic and aligned with global shifts. The success of these strategies will depend significantly on diplomatic efforts and internal policy adjustments.
