Coronavirus pandemic: Hydroxychloroquine and the balance of trade

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Published: April 8, 2020 6:15:17 AM

India’s decision to selectively allow export of hydroxychloroquine to countries badly affected by coronavirus as well as its neighbours in South Asia is a welcome step.

India’s decision to selectively allow export of hydroxychloroquine to countries badly affected by coronavirus as well as its neighbours in South Asia is a welcome step.

A fresh trade row kicked up between India and the US amidst their struggle to contain the novel coronavirus. The issue was the export of hydroxychloroquine—a drug commonly used for treating malaria, and arthritis. The US, worst affected globally from Covid-19, is looking to use the drug to treat its infected. It began stockpiling the drug and was looking to procure large doses from India, one of the largest global producers of the drug. India had banned export of hydroxychloroquine for ensuring its availability at home. However, it has relaxed the ban following President Trump’s threat of retaliation.

India’s decision to selectively allow export of hydroxychloroquine to countries badly affected by coronavirus as well as its neighbours in South Asia is a welcome step. While the US threat was certainly a factor in this, India would have also realised that by allowing exports, even selectively, it would be recognised as a globally responsible stakeholder in the fight against the pandemic. This is evident from the fact that apart from the US and India’s neighbours, countries like Spain, Australia, and Brazil, too, had requested India to lift the ban. India’s move brings a lot of relief to these countries.

The move marks a rapid turnaround in India’s export policies, highlighting the volatile global conditions and the problems of making trade-restrictive policies at this juncture. On March 25, India prohibited export of hydroxychloroquine and its formulations—except by SEZs for fulfilling export obligations, in cases where advance payments have been received, and on humanitarian grounds to countries recommended by Ministry of External Affairs. On April 4, even these limited channels for export of hydroxychloroquine were scrapped, sparking international reactions, most prominently from the US, and leading to President Trump, in a telephone conversation, urging prime minister Modi to withdraw the total ban. His customary threat of retaliation if India didn’t do so signaled the US’s desperation to access the drug.

During a pandemic outbreak, export bans are a normal reaction. Since the outbreak of Covid-19, over fifty countries have introduced curbs on exports. Countries tend to store essential medicines, and medical equipment to ensure adequate domestic supply for patients, and healthcare professionals. This, however, causes significant disruptions in global efforts to tackle the pandemic.

Globally, countries have varying capacities and abilities to produce medicines and medical products. No country is self-sufficient in supplies, particularly when it comes to handling a pandemic of the scale of Covid-19. India, for instance, while having banned exports of several drugs and personal protective equipment, has desperately been trying to procure more of these for its own use, along with critical medical equipments like ventilators. Ensuring adequate availability of ventilators, masks, hand sanitisers, and testing kits has been a major challenge for India. While not comparable in scale, this is similar to the challenge that the US and other countries are facing with respect to drugs like hydroxychloroquine.

The clear point here is that trade helps address the shortfalls that countries face in handling crises. Stopping exports, or imposing severe restrictions on them, is certainly not the best way of handling a pandemic that has already infected more than a million people in the world and claimed almost 70,000 lives. This is as true for India as it is for many countries of the world.

India’s April 6 decision to resume exports of 24 drugs it had earlier banned, and their intermediates, is a step in the right direction, as is permission to export hydroxychloroquine, and paracetamol and its formulations, even if selectively. There are multiple benefits for India in doing this, too.

First, it gives India an assurance of reciprocity in supplies. By giving others what they require at a difficult time, India earns the goodwill, and the priority right to ask of others what it needs. It is important to note that there is currently a scramble for securing essential medical items among countries. As India exports some of these to others, it is able to climb up the ladder of priority recipients in getting what it needs.

Second, it allows India to avoid unnecessary retaliation. Apart from the US hinting at retaliation if India didn’t relax the export ban, others, while they have not been explicit, too, would have noted India’s stubborn refusal of their pleas. The inevitable result would have been some form of trade restriction against India—if not now, then over time. The war against Covid-19 is not going to get over soon. It is also not going to be limited to sourcing medical supplies. The economic struggle for countries, which is expected to be prolonged, is expected to begin once the pandemic bottoms out. Unsupportive trade conditions during such a situation is not something India, or many other countries hard pressed with economic woes, would like to face.

Finally, the move is an undisputed economic gain for Indian pharma. If India’s immensely capable pharma producers are able to export key drugs while ensuring enough supplies for domestic use, they can capitalise on a global demand that is only expected to increase over the next months. And, that is rare good news at a time of deep-rooted economic gloom.

(The author is Senior Research Fellow, Institute of South Asian Studies, NUS. Views are personal)

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