Common folks like me and you have a different understanding of the flow of money in the country. While trying to understand complex concepts of economics, we try to connect them with either national economy or financial market. But, both of them are incomplete without trade and commerce. This is what our Commerce Minister Piyush Goyal made us realise.
The tiger is roaring. The Bubbar Sher of Make-in-India has upshot its potential to such an extent that erstwhile economic powers are rushing to invest in the country. It’s true, that the Ministry of Finance chips away with most of the praise. It is because it mainly controls the flow of money in the economy. However, the pillar of that flow is the Ministry of Commerce and Industry. It ensures that the money flowing into the economy keeps oscillating back and forth to different agents. Unlike the socialist era, it does not end up in the pockets of Babus. In short, Piyush Goyal-led Ministry ensures the trade environment in the country is smooth. And that is why he deserves credit for being the hero of India’s economic revival.
Pulled out of RCEP
When Piyush Goyal took charge as the Minister of Commerce and Industry in 2019, one of the biggest issues blocking India’s Foreign trade prospects was the long-awaited negotiations around Regional Comprehensive Economic Partnership (RCEP). A lot of trade-related aspects were stuck due to unnecessary negotiations. Piyush Goyal wanted to close the chapter. India wanted to safeguard its agriculture, dairy and services sectors from the excess imports due to FTA.
Additionally, if India had gone ahead with the deal then our markets would have seen massive upsurge in Chinese products. Time and again the RCEP countries did not cater to our demands. During the first term of the Modi government, Piyush Goyal kept a close eye on the deal. That is why within 5 months of taking oath as Commerce Minister, he decided to pull India out of an explicitly discriminatory deal.
Bilateral FTAs are becoming norms
But trade is essential and international trade should be as restriction-free as possible. However, the problem with most of the trade deals advocating for free trade is that they are multilateral in nature. The former big bulls of the world like the US, and the UK come and try to dominate the stage, undermining the interests of countries like India. Probably, no one understands this better than Goyal.
Goyal did not want to surrender country’s interests to long and arduous negotiations. So, he went on to target individual countries. Various details of bilateral Commerce were chalked out and countries were identified. These countries include the UK, UAE, and Australia among others. Though Covid-19 delayed some deals, as soon as the smoke was cleared around global trade, the treaties were penned.
CEPA with UAE
In February this year, India signed India-UAE Comprehensive Economic Partnership Agreement (CEPA). The deal provided duty-free access to the Emirates market for 90 per cent of our Exports, which include both goods and services worth $26 billion. Bilateral trade between both countries is expected to surge from $60 billion to $100 billion in the next 5 years.
ECTA with Australia
2 Months later, a blockbuster and subject to more fanfare deal was signed between India and Australia. The deal is called India-Australia Economic Cooperation and Trade Agreement (Ind- Aus ECTA). It was significant as the deal officially earmarked the arrival of Indian economy in the big league. Australia is one of the few officially developed economies of the pre-covid world. An FTA with Australia grabbed much more headlines, especially in the zealous western media and even academia.
On a technical level, the deal was a big win for India. India was looking for an affluent market to trade with and Australia is charging nil duty on 96.4 per cent of our exports including textiles, leather, furniture, and sports goods among others. Duties on the remaining 113 export items will soon be phased out. In terms of imports, India ensured that it protects its milk, chickpeas, grains, dairy products, medical devices and a few others from competition posed by Australian products. Shrewd Goyal also ended up getting an advantageous position for India’s steel, garments and aluminium from the deal.
EU and UK are fighting for India’s market
Watching its Ashes rival gain lead, the United Kingdom also did not want to stay behind in its race. It has been pushing the Modi government for an FTA, but Piyush Goyal is taking his time and after weighing the pros and cons, Minister has said that the deal is expected to be chalked out by Diwali this year.
The UK wants a specific deal with India because it is no longer a part of the European Union. The geographical block is also trying to take India on board. After years of making them wait did Piyush Goyal finally get ready to restart negotiations with the block.
But all these trade deals would not have been possible without strengthening internal trade aspects. Internal trade is the foundation of foreign trade, without being Aatmanirbhar, we can’t make other countries believe that we can transport them quality products. To strengthen it, Piyush Goyal-led Ministry came up with revolutionary Production Linked Incentive (PLI) scheme.
Strengthened internal production through PLI
As the name suggests, Industries would be provided incentives in a phased manner and according to their performance. The scheme focuses on creating job-intensive production facilities in various segments including solar, automobile, electronics, and drones among others. Later, the government increased its efficiency by identifying key bottlenecks in its implementation. Top-level think tanks including NITI Aayog were roped in for a strictly data-driven approach. The 1.97 lakh crore incentive was predicted to bring in a rush of big-ticket investments among others. We at TFI had done extensive reports about its effect in the long run.
The scheme has turned out to be a game-changer for India in the post-Covid world order. India is emerging as the manufacturing hub of the world. Many companies including HP and Taiwan’s Wistron among others are setting their base in India. The competition is so tough that even Elon Musk is sitting on the periphery waiting for his turn to get fully involved in India’s growth story.
Strengthened Aatmanirbhar Bharat
Ministry of Commerce has put similar efforts into Aatmanirbhar Bharat through Make in India and Startup India. It has coordinated with ministries to launch various schemes to enable Make in India. Big industrial corridors are being established to aim only at manufacturing. To attract investment in these corridors, youth are being promoted for finding new and innovative startups.
The outcome has been outstanding, to say the least. India is quickly emerging as the manufacturing hub of the world. These developments were initially led by foreign investments, but now they are getting replaced by Desi startups. India already has amassed more than 100 unicorns and numbers are increasing in exponential terms.
WTO on its knees
On the back of the aforementioned achievements, Piyush Goyal was successful in bringing WTO to its knees. For the first time in decades, a country outside the league of Western hegemons came out of WTO negotiations, thumping its chest with the confidence that it has conquered the table. WTO had to accede to India’s demands on Farm Subsidy, TRIPS Weaver and Fisheries subsidy. India’s demands for e-commerce will be met in the next plenary session of the multinational trade table.
No wonder, Shri Goyal is confident that India can achieve the target of $30 trillion in Gross Domestic product in the next 30 years. The target is not as big as it looks. India is one of the youngest countries in the world, companies are jumping in to invest and Piyush Goyal will be ready with more and more reforms.
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