The biggest economic gains for India now lie in fixing domestic regulations rather than signing more trade deals, according to consultancy firm Competere’s CEO Shanker Singham. In an interview with FE’s Manu Kaushik, he said India could unlock about $174 billion over five years by easing investment restrictions and avoiding separate digital competition law. Edited excerpts:
FE: Your latest report estimates India could has suffered losses of about $174 billion over five years due to market distortions. How did you arrive at this figure?
Shanker Singham: We use an econometric model based on 13 years of data from 130 countries that links GDP per capita with three pillars — trade openness, domestic competition and property rights. India improved more than any other country between 2010 and 2023. The $174 billion represents the additional economic output India could generate over five years by addressing key remaining distortions, particularly foreign investment restrictions and competition-related barriers.
FE: Which reforms would generate the biggest gains?
Singham: Domestic regulatory reforms matter more than trade liberalisation. Our model shows improving domestic competition has a larger impact on GDP per capita than further trade opening. Reforms such as GST, insolvency laws and trade facilitation have already delivered significant gains. The next phase should focus on improving the domestic regulatory environment.
FE: Which sectors contribute most to these remaining distortions?
Singham: We examined restrictions in sectors such as retail, e-commerce, telecom, media and space. E-commerce is particularly important because it has become a major driver of global trade. We also found that regulations favouring certain business models over others weaken competition and economic efficiency.
FE: You have also cautioned against India’s proposed Digital Competition Bill. Why?
Singham: Digital markets are different from traditional markets. Excessive regulation risks curbing innovation before it happens. Europe has followed an interventionist approach and has struggled to build globally competitive tech firms. India has strong AI and digital capabilities, and it should avoid creating a regulatory environment that discourages innovation.
FE: India has signed several FTAs recently. How do you assess their impact?
Singham: Agreements with the UK and the UAE are important and will strengthen the country’s trade performance over time. However, the biggest economic gains still come from domestic reforms rather than trade agreements alone.
FE: The US has imposed tariffs on several countries, including India. How do you view their impact on the domestic economy?
Singham: Tariffs do reduce trade openness and carry economic costs. But the US argues they are addressing distortions in other markets. The key is that tariffs should be linked to identifiable distortions and reduced when those distortions are removed. For India, reducing domestic regulatory barriers would not only strengthen its own economy but also reduce trade frictions with partners.