India must start playing a bigger role on the world stage
Updated: Nov 27, 2020 5:06 PM
For one, many Indian citizens, whether motivated politically or through genuine concerns were against such a partnership with fears that the market would be flooded with cheaper imported goods against which the local manufacturers could not compete.
India is still an active player when it comes to maintaining and growing its international relations, even if it does not set the world order.
By Abhinav Dixit
On November 16th, 15 countries, representing 2.1 billion people and 29% of the global GDP, signed the Regional Comprehensive Economic Partnership (RCEP), the largest trade pact in the world.India, however, was a notable absentee and opted out of the pact last year. Before taking the easy route and berating the government for missing another opportunity, it’s fair to say that there are legitimate concerns with this deal.
For one, many Indian citizens, whether motivated politically or through genuine concerns were against such a partnership with fears that the market would be flooded with cheaper imported goods against which the local manufacturers could not compete. Additionally, the deal itself is not as extensive as the comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and is unlikely to kick start an instantaneous economic recovery, which is of a higher priority for India given the pandemic. Moreover, Japan and others have left the door open for India if the country wishes to join the deal again in the coming years, especially because there was hope that India’s presence could counter the dominance of China in the trade deal.
However, it’s safe to say that the chances of India re-joining this deal are negligible. The ongoing border disputes with China make it impossible for the current government to agree to any new deals involving India’s neighbour. Moreover, India is unlikely to change its protectionist stance radically in the immediate future. Exposing domestic manufacturers and suppliers to a competitive international market does not play well politically and the government in power would probably face significant domestic backlash for any such move.
Even after acknowledging these factors, there is still a palpable sense of disappointment around this whole affair for India. For all its hyperbole and rhetoric over the years, the country is simply not delivering on its potential on the world stage. Another ship has sailed without India and if this trend continues, she is likely to get left behind sooner rather than later. India is not part of the G-7 (though President Trump has tried to change that by including Russia, Australia, South Korea, and India).
Additionally, the BRICS association, which was created as an alternative to the G-7, is at a major crossroads because of the existing anti-China sentiment from India and Brazil (President Jair Bolsonaro ran on an anti-China platform and has blocked China from Brazil’s 5G roll-out). India is also not a member of the Organization for Economic Co-operation and Development (OECD) though it now takes part in various committees.
The India-EU Free Trade Agreement has been in the works since 2007 and the India-EFTA (European Free Trade Association) deal has been stalled since January 2008. These are just a few ready examples, but India’s modern history is littered with instances of either not being at the table or not participating in widespread international collaboration.
Furthermore, the effort of making India ‘self-reliant’ (Atma Nirbhar) is a noble one but one that simply cannot be accomplished overnight. To shape the country into becoming a global manufacturing hub not only requires more long-term planning but also requires a less scattergun approach. So far, India has promoted the shunning goods from its neighbour, failed to standardize testing regulations to global standards, and has issued complex public procurement orders.
The country still has an immensely complex tax regime which includes retrospective taxation of cross-border investments. Additionally, even without India, Chinese goods are still likely to flood domestic markets in other countries for the time being. Catching up to that dominance will take years if not decades. Once again, the rhetoric and intentions are present, but the implementation is far from ideal.
However, it’s not all doom and gloom. India may be missing golden opportunities, but the country still has quite a few avenues to explore. India’s pharmaceutical industry is one of its biggest strengths and the pandemic has shown that the country is a reliable player in times of crisis. Additionally, a trade deal with the US should be India’s biggest priority after missing out on the RCEP. As President-Elect Joe Biden starts grappling with the massive challenges facing his administration, he is likely to rely on more active foreign partnerships and alliances. We can expect Mr Biden’s administration to be more predictable and stable, both of which are priceless commodities in 2020. The country should also use the new administration as a springboard to cement the much-publicized Quadrilateral Security Dialogue (Quad) as a permanent fixture of its foreign operations. Finally, the country is also home to the International Solar Alliance (ISA), an inter-governmental organization which was jointly launched by India and France in 2015. While its results have so far been mixed, there’s a lot of potential to grow the program, and leveraging its successes can open more avenues for bilateral partnerships around the globe, especially as climate change becomes the biggest problem facing the world. These are all opportunities that can give India’s economy significant momentum to bounce back in 2021.
India is still an active player when it comes to maintaining and growing its international relations, even if it does not set the world order. Maybe it’s finally time for the country to step up to the plate and become a leader. There’s a clear path after the advent of RCEP, but will we see India finally deliver on its potential?
(The author is an Associate at the U.S.-India Strategic Partnership Forum. Views are personal)