“India in reverse”. That’s the headline from yesterday’s lead editorial in the New York Times.
The piece focuses on the Indian economy’s spectacular downward slide over the last several weeks. And there’s plenty to be concerned about.
But “India in Reverse” just as aptly describes the policy direction of a government that is turning away from reform and embracing the failed plans of the past.
India’s spectacularly high tariffs and numerous trade barriers have long made it one of the world’s most protectionist countries.
Now, in a misguided attempt to benefit a few domestic interests at the expense of manufacturing and jobs everywhere else, India is forcing the local production of everything from telecommunications and clean energy equipment to medicines and medical devices.
Discriminatory and damaging policies like these are contrary to international norms and longstanding global trade rules. They are alienating the very businesses and investors India needs to help stabilize a slumping economy.
As Reuters recently reported, Indian business leaders are warning that failure to bring about substantive public policy and infrastructure reforms will lead to greater flight of domestic businesses, jobs and capital to other countries.
Their dire predictions are already coming true. According to data from India’s Department of Industrial Policy and Promotion, the value of foreign direct investment in India plummeted by more than 36 percent between financial year 2011-2012 and financial year 2012-2013.
To restore confidence, India must pursue economic and policy reforms simultaneously. Manufacturers in India and America recognize the two are not mutually exclusive. The question remains, will the Indian government?
For additional information on India trade issues, please visit http://www.nam.org/Issues/Trade/Fair-and-Global-Economy.aspx and the Alliance for Fair Trade with India (AFTI) http://aftindia.org/.
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