Q. Do the recent trade agreements with the EU and US signal a fundamental shift in India’s trade policy?
They show that India has emerged out of the shadows. Today, it is a very self-confident country. It engages with the developed nations from a position of strength. Ultimately, free trade agreements are about the future. As India lays down the roadmap for a $30 trillion economy, the delta of opportunity from $4 trillion to $30 trillion is huge and unparalleled. All stars are aligned for this. We have a decisive leadership, with Prime Minister Narendra Modi leading from the front, willing to take risks, making bold reform decisions and transforming the mindset of the nation. We have the demographic dividend of young Indians under 30, which will last us for the next 30 years as we grow to a $30 trillion economy. I call it the power of 30-30-30. A population of 1.4 billion that is aspirational, desires all the good things in life and thus generates huge demand. In every respect, India stands at the threshold of a rapid growth story. And when we engage with partners like the US, EU, UK and others, we are preparing ourselves to engage with the best in terms of quality. We are preparing to leverage the strength of our youth’s talent and skills. We are preparing our women to contribute much more to the formal economy. In effect, we are making inclusive growth and sustainability our mantra during this Amrit Kaal.
Q. India, like many countries, had protective tariff walls in the past. What gives us the confidence now to open our doors while protecting our industry?
The Congress and the UPA government under Prime Minister Manmohan Singh used to make a fundamental mistake while negotiating FTAs. They made them with less-developed or developing countries, who were largely our competitors. They lacked the courage of conviction to talk to the developed world other than Japan and Korea. And, sadly, both those terms are so badly negotiated that our exports to these two geographies have just not grown in the 15 years we have been there. Whereas every one of the trade deals Prime Minister Modi has inked in the past few years—from Mauritius, Australia, New Zealand, Oman, the UAE, the EFTA bloc to the EU and the UK—has been with economies that complement India’s growth and are not in competition. We truly provide opportunities for their investments to work, leveraging their innovation and technologies, and providing jobs to Indians.
Q. With the BJP a votary of the Swadeshi economic model, which critics see as protectionist, did your party or the Sangh Parivar resist these trade deals?
I had no issue whatsoever. I say this with full confidence because we have not compromised any of our national interests in any of the deals. For example, our dairy sector has not been opened to imports in any of the FTAs. Countries like Switzerland, New Zealand, and the EU have never done an FTA without the dairy sector. We are the first because we were confident that we would be able to explain to them that we cannot compromise our small animal husbandry workers or farmers who may have just three or four livestock and can’t compete with organised dairy in the developed world. We have an honest and plainspeaking approach in negotiations. Countries today trust Prime Minister Modi to give them a fair deal and recognise that India is a trusted partner that will only help their economies in the future. So, our idea is to capture the low-hanging fruit, not to make perfect the enemy of good, look for commonalities. I respect their sensitivities and they respect ours.
Q. Critics also allege that compromises in agriculture have been made in the US deal. Is it true?
We have not compromised on agriculture at all. There is absolutely no compromise on a variety of products that are sensitive in the Indian context. It’s a win-win.
Q. What about soybeans and apples?
We have not opened to soybean or soybean meal. We do import soybean oil; we have been doing so since the time of the Congress governments. We also import fruits from America and other countries. It gives consumers more options, like they get better-quality apples than the ones we get from Turkey. So, giving a concession there is a zero-sum game.
Q. India has agreed to eliminate or reduce most favoured nation (MFN) tariffs on all US industrial goods, but the US has not done the same; it has only reduced reciprocal tariffs. Why has India made permanent tariff concessions in exchange for tariffs that Washington itself calls conditional and reversible?
Two things. First of all, we have not reduced tariffs on all industrial goods to zero. In some cases, tariffs will be calibrated over time; in others, we have laid down quotas. And where we have no sensitivity and need imports to develop our economy, like NVIDIA chips, we have allowed them. So, it’s a very calibrated, well-thought-out, item-wise approach. Point two, the reciprocal tariffs are for real and the whole world has negotiated on them. We have got an understanding with the United States that, should the reciprocal tariffs be taken off for everybody, we too will have the opportunity to recalibrate our concessions. So, it’s a very well-understood and balanced relationship. And I must say, the American negotiators are very fair.
Q. What about India’s intent to buy $500 billion worth of US goods? Given that the current Indo-US trade is $212 billion or so, how will we honour our intent over five years, as has been mentioned?
We have done a very careful analysis. Many American products have a competitive edge over those from other nations. Even today, we import $300 billion worth of such products from around the world and the need is growing rapidly. For example, imports of ICT [information and communication technology] products have grown by as much as 20 per cent in some years. We estimate that in the next five years, we will need to import about $2 trillion worth of energy products—including crude oil and LPG—precious metals, ICT products, hi-tech semiconductor chips, coking coal, aircraft and aircraft parts. I see no reason why, in that $2 trillion pie, Indian importers should not have the option to import from the US. Our approach for products that we need to buy anyway is very simple: the more the merrier. I would welcome competition among global suppliers so that India gets the best deal, it is good for Indian consumers and the economy, and spurs growth.
Q. What about an agreement on mobility, given the tough situation we have been facing after Trump in his second term has imposed curbs on H-1B visas and made them more costly?
Look, any nation can lay down rules or laws, including restrictions on H-1B visa-holders. I don’t think this will impact our relationship or trade potential. On the contrary, it’ll be good for India. Let me explain why. Today, India has 1,800-plus global capability centres (GCCs). We don’t have to be sitting in an office in New York or Tokyo to do things that can be done offshore. So, instead of hiring people and sending them to the US at top-dollar salaries, foreign companies can attract top talent by setting up GCCs in India. It will be good for them, helping them become more efficient. And when they come, give jobs to Indians in India, we can be in our homes, with our families and with our cultural identity and family values intact. We pay taxes in India, invest our savings here, consume and create demand in India. It boosts the real estate industry, as well as related ecosystems like restaurants and hotels. The icing on the cake is that we earn more foreign exchange. So, in every respect, this is far better than the nominal remittance a person going and living abroad can send.
Q. What about the other elephant in the room: the deal with the US to stop buying Russian oil in exchange for a waiver of the additional 25 per cent penalty? How do we meet our oil needs now at a reasonable cost?
The foreign ministry handles that subject. We have handled it very admirably, and they have from time to time briefed people about the progress in that respect. So, you can speak to them about it.
Q. We have also agreed to remove or lower our non-tariff barriers. Are we, in some sense, allowing America to determine these?
It is a win-win for us. We want to see India as a modern nation which engages with the world on equal terms. We would like our customers—1.4 billion Indians—to also enjoy the same high quality the world is enjoying. Prime Minister Modi has from the day he took charge talked about zero effect, zero defect. In a recent Mann Ki Baat episode too, he said that India must become a quality-conscious nation. We are very clear that we should develop a Brand India that is recognised the world over for its high quality both for goods and services.
Q. How do these deals benefit the common man? What is their employment potential and in which areas?
Indians will benefit in every sector of the economy, whether it’s labour-oriented sectors like textiles, apparel, shoes, leather goods, sportswear, or fishermen, farmers, skilled workers, handicrafts or handlooms. The deals provide a big boost to make in India and will therefore create substantial job and investment opportunities. They will also enable our startups to attract investments, while providing stability and predictability.
Q. Could you put a number to the kind of jobs that will be created?
Well, numbers are up to the people and investors. If our exporters grab this opportunity, the sky is the limit. You could get millions of jobs. Also, it’s up to us to come out of our comfort zones and grab the global opportunities PM Modi is opening through his astute management of the Indian economy. PM Modi has, particularly in the past six months, powered a reform express, which is going at breakneck speed. And our FTAs and international engagements are an integral part of his reform and transform agenda, because if we don’t reform, don’t make it easier for companies to do business, don’t make the lives of the common man easier, don’t decriminalise the onerous provisions of law, don’t reduce the process, procedure and compliance burden, we will not become a developed nation by 2047. This is the collective commitment of 140 crore Indians. A Viksit Bharat by 2047 is non-negotiable.
– Ends
Tune In
