Protectionism to continue if BJP comes back to power | Finance News
The new financial year 2024-25 begins today with a high probability of the Lok Sabha elections bringing back the ruling party to power with a bigger majority. Given the context, the views expressed by some ministers and experts at ‘BS Manthan’, an event organized last week by this newspaper to celebrate its 50th year, acquire greater significance.
The commerce minister left no one in any doubt that the government will protect the domestic producers as long as they felt that it was necessary. In a different context, Montek Singh Ahluwalia, one of the architects of economic liberalisation in the nineties, said that the benefits of protectionism go to the producers whereas the costs of protectionism are borne by the consumers. Incidentally, the commerce minister heads the Ministry of Consumer Affairs as well. He said that the trade policy was a calibrated one and that it was in line with the country’s development journey, which apparently meant that as a developing country, India is quite right in protecting its domestic producers just as the now richer countries protected their domestic producers when they were developing economies.
The commerce minister was emphatic that in 2012, India made a big mistake in entering into negotiations with the Regional Comprehensive Economic Partnership (RCEP), a grouping of 13 countries in East Asia plus Australia and New Zealand. He said that the government took the right decision to walk out of RCEP after extensive consultations with the domestic industry, who expressed fear of goods produced in China swamping the economy and wiping them out. He indicated that, generally speaking, India will not be a part of any regional trade negotiations that involve China.
The minister praised the recently concluded trade deal with European Free Trade Association (EFTA), a loose grouping of Switzerland, Norway, Iceland and Liechtenstein, that envisages investment of $100 billion by these countries in India. He said that the trade negotiations with the United Kingdom and the European Union will be concluded soon. It appears that the essentials of the pact with the EFTA could be the template for future bilateral negotiations with richer countries.
The finance minister said that artificial protection creating inefficiencies cannot be supported and that the government is conscious of that.
‘And so there are calibrations being done in this policy … We do want to give some protection for some time. It is not permanent’, she said.
The finance minister also assured that the government will continue the push on its reform agenda. The Minister for Electronics & Information Technology, Telecom, and Railways said that India will become a product nation, and many of these products will be coming from deep tech sectors, and will affect every citizen’s lives.
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