By Nilaya Varma

Globalisation, offered tremendous trade opportunities for the world at large. With rapidly emerging new technologies, the potential for economically and politically stable nations such as India is enormous. Today, we are witnessing massive challenges to the global economic landscape. The World Trade Organization (WTO) has already raised an alarm on growing tensions amongst nations in promoting free trade.

The US-China trade conflicts have aggravated global political risks and financial costs over the past year leading the world to ‘de-globalisation’ of supply chains, wherein, the companies seek to produce closer to their consumer markets to avoid uncertainty, as well as to mitigate the costs of tariffs.

It, unarguably, provides an opportunity for political and largely bureaucratic neutral nations such as India to bolster its position as a favoured nation for free trade. With multinational enterprises moving their supply chains closer to their markets, it is an icing on the cake for our demand-rich nation. However, we have not leveraged as much benefit as we could have in comparison to our regional counterparts.

Citing the example of Vietnam, which has gained orders from trade diversion on tariffed goods equal to 7.9% of GDP through the first quarter of 2019. Their trade diplomacy has played a critical role in facilitating the country’s rise to an Asian ‘trade celebrity nation’. The country’s international trade missions have been entrusted for proposing mechanisms and policies to capitalise on the deals, and promoting Vietnam’s entry to regional and global value chains.

The trade-progressive nations had long realised the importance of having specialists as trade diplomats. Most developed nations are actively using their international embassies as a platform for promoting and building new trade connections. They have designated trade attaches at various embassy locations across the globe to help build trade-related capacity. However, India’s limited global presence restricts us from broadening our trade profile.

It is imperative for India to expand its network of foreign missions to more countries and have a team of trade attaches who manage trade development agenda with regard to trade policies and negotiations, as well as productive capacities essential to compete on a global platform.

For now, India has just 181 international missions while smaller economies like France, Spain and Italy have many more. India needs to establish foreign missions that will open the doors to unexplored markets and new trade alliances.

The finance minister, in her budget speech this year, had announced that India has decided to expand its diplomatic outreach in Africa with setting up of 18 new missions, five of which are already set up. Hence, investment in a cadre of trade officers trained specifically for bolstering trade would be beneficial.
To further empower and entrust Indian foreign missions abroad, it would be ideal to develop an in-house Indian Trade Facilitation Office (ITFO) which should focus on the below-mentioned areas.

  • A designated officer should be supported by a team of trade specialists responsible for harnessing trade potential.
  • ITFO would also be India’s Ambassador and Permanent Representative to key international trade promotion bodies such as WTO.
  • ITFO to be also responsible for protecting the interest of existing Indian businesses abroad and extend necessary professional support.
  • It can also play an important role in facilitating government’s international spending for promoting bilateral trade. ITFO may monitor such investments and ensure proper grounding of all such efforts.
  • ITFO can work on building a plethora of ground level knowledge base, i.e., country-specific trade opportunities and extend such information to Indian companies.
  • ITFO can also be the key point of contact for state governments in India, and given the economic diversity of each state, it can play an important role in grounding ‘comparative advantage’ state-wise.
  • ITFO will also be responsible for scouting of country-specific opportunities. For example, Dubai Expo 2020 had a several billion dollar budget, and its organising authority had issued hundreds of global tenders. However, hardly any of it was directly given to an Indian company. Here, ITFO’s role would have been to keep a tab on every single opportunity and inform Indian companies through a centralised database. The quantum of such huge opportunities would benefit Indian businesses if ITFOs initiate such scouting.

Today, India is considered a crucial player on the global economic landscape. But its trade policies, economic strengths and technological advancements are not living up to their potential, unless we expand our reach to unexplored markets and attract investors. The government is already inking important deals with many nations that will contribute to the economic development of the country. A trade specific venture through our foreign missions will give us an extra edge in global trading, and bridge any gaps that come in the way of boosting India’s share in international trade.

(The writer is Partner and Leader (Markets Enablement), KPMG in India. Views are personal)