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Giving India an edge in trade

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In a recent article, economists Praveen Krishna and Arvind Panagriya discussed how India, during 2000-11, signed 14 preferential trade agreements (PTAs).

Of these, 10 were bilateral agreements with individual countries (including Japan, South Korea, Malaysia and Singapore) and four were plurilateral agreements (with the Association of Southeast Asian Nations or Asean and the Southern Common Market in South America or Mercosur).

Build trade capacity

Krishna and Panagriya show how the effects of these agreements on trade were modest at best. My understanding from the government’s decision not to the join Regional Comprehensive Economic Partnership (RCEP) — seen as one of the largest trade partnerships (given the market and population size) — is that it must not be seen as a justification for India’s industrial project to advocate for a ‘protectionist trade outlook’ or be subject to pressures of lobbying business groups.

Instead, it must be seen as an opportunity for the government to reflect on India’s poor competitiveness levels, especially in commodities (and their exports) and how these can be enhanced vis-à-vis other regional partners (including those in Asean).

Ensuring higher competitiveness in production remains key to India’s ambition of expanding its market integration with other countries within........

© DailyO