US firms may become sluggish if cheaper products and efficient services are cut off to them due to protectionist policies, finance minister Arun Jaitley said Saturday, amid concerns that protectionism in the US can affect Indian companies. He said India has so far not been impacted by US’ protectionist overtones and hoped nations will realise that free trade is the only way forward.
Speaking at a session at the Asian Development Bank’s 50th annual meet, he said developed economies are aided when their companies benefit from cheaper products and more efficient services outsourced from countries like India. “If this itself is reduced, it is quite likely that these companies themselves may become sluggish because then you have to rely on products which are costlier, services which are less effective,” he said.
He said economies will have to become more efficient in order to make sure their goods and services have acceptability all over the world. On the impact of Trump administration’s executive orders curbing visas for skilled workers and ‘Buy American, Hire American’ policy, the minister said, “I don’t think we have felt any impact because of the executive order at the moment.” He said no economy can be immune from what happens in the rest of the world.
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“So if there is a global slowdown, the slowdown will certainly impact demand, exports and these impacts would be domestically felt also.
“If commodity or oil prices fluctuate, it is going to have significant impact on an economy like India,” he said. While the global economy impacted India, the country’s large market and domestic demand kept its economy going, helping it clock 7.5% plus growth even during global slowdown.
“And that is essentially because of a set of large number of structural reforms. “One of the major structural reforms was we became one of the most open economies in the world, and we simplified FDI procedures and over the last 2-3 years. We became the largest recipient globally of FDI and that became a great additionality of resource for domestic economy,” he said.