Concern over the domestic economy should not result in barriers on free trade, according to Union Minister of State for Commerce and Industry Jyotiraditya Scindia.
While the country would benefit from opening itself up further to international competition, he promised that the interests of farmers and labour-intensive industries would be protected.
In a discussion with journalists from The Hindu group on Wednesday, Mr. Scindia defended the Free Trade Agreement (FTA) recently signed with the Association of South East Asian Nations (ASEAN), saying that it would benefit India in the long run.
“The axis of power is changing. It is slowly moving from the west to the east. The ASEAN region of which we are a very important part, I hope, in the future, will become one of the major trading blocs in the world. Therefore, integration in this axis is very important from India’s point of view,” he said.
He said strategic and labour-intensive areas such as agriculture, handloom and marine industries were given adequate safeguards in the FTA, with 489 items excluded from the list of tariff concessions.
The option of imposing safeguard duties, rules of origin and the lack of an early harvest scheme were additional protective measures, he said, adding that a cost-benefit analysis would show that the FTA was in the long-term interest of farmers, he said.
In fact, Indian farming could benefit from global trade, as India had natural competitive advantages and “enormous untapped potential” in the agricultural export sector.
While the export of a few agricultural products were banned for food security reasons, there was a huge opportunity to take farmers up the value chain by expanding processed food exports, he said.
“The next big opportunity in India from a strategic perspective, over the next decade, is the whole concept of farm to fork,” said Mr. Scindia. “The bottleneck is logistics,” he added.
If cold storage and transport facilities are improved, then India could increase its 1.5 per cent share in the $800 billion pool of global agro exports.
On the ongoing Doha round of World Trade Organisation talks, Mr. Scindia said India would continue to protect the interests of farmers.
At the same time, he warned against protectionist tendencies, especially by developed countries, at a time of global recession.
India had bucked the global trend with a healthy 6.2 per cent GDP growth rate over the last year, with the aid of the government’s stimulus packages totalling Rs. 1.86 lakh crore.
Though exports dipped by 33 per cent between December 2008 and April 2009, the rate of decline was arrested, he said. Positive growth in exports could be expected by the end of 2009, he added.
The new Foreign Trade Policy was aimed at doubling India’s share in world trade by 2020. Asked if the proposed Direct Tax Code would prevent this target from being achieved, Mr. Scindia said that his Ministry was in discussion with the Finance Ministry to ensure that the interests of exporters were protected.
He indicated that the Code was only an advisory as of now, and that the final draft expected in six to eight months would incorporate the Ministry’s suggestions.