Intro: This week on Socio Economic Voices, we have Dr Badri Narayanan Gopalakrishnan, Lead Adviser and Head, Trade, Commerce and Strategic Economic Dialogue, NITI Aayog, Government of India. He talks about how India should position itself globally amid the ongoing global recession, how MSMEs need more support, how falling Rupee can be beneficial for the export sector and also how inflation can be tamed via public investments and expenditure to promote efficiency in logistics. Read further for a detailed conversation with Senior Journalist Mahima Sharma where Dr Gopalakrishnan also asserts that there can be no structured & detailed dialogue with China in the foreseeable future unless current difficulties fade, but he hints that India should take advantage of the 'China+1' sentiment.
MS: What kind of Strategic Economic Dialogues India will be looking at/is looking at in 2023 towards strengthening its global position amid ongoing recession?
BNG: India has been doing an active set of Strategic Economic Dialogues with many key partner countries. There are a wide range of topics being discussed therein. Some of them include international trade, sustainability, green transition, education, skill development, agricultural ecology, etc. While some of them entail developing capacity in India, promoting market access for India in these countries, developing cooperative projects for evolving solutions for pressing global issues, etc., some of them also entail sharing the roadmaps to our experience of successes we’ve achieved in India such as UPI, digital India, last mile delivery public services etc. All these are aimed at contributing to an evolution of a global order that is resilient and sustainable despite all the crises we are facing now and may face in the future.
MS: India's global trade and commerce ambitions vs the business environment challenges-what's your take on the same? How must India stride ahead in turbulent times?
BNG: Both are intricately related to each other. We've been improving our business environment by leaps and bounds and the results are beginning to show up particularly in terms of the extent of investments pouring into India in the context of global geopolitical changes. Now trade and commerce policies are mainly aimed at promoting exports from India and plugging into the global value chains. The recent and ongoing successes in trade deals with complementary partner countries is an important example which must continue to stride ahead in turbulent times. Many business challenges still remain and are being addressed gradually- which needs to be taken up with renewed vigor.
MS: What kind of strategic dialogues, new trade pacts and new policies are needed between India and China to gather a better economic momentum in Asia?
BNG: India and China have a centuries old long civilizational connection and interdependence and a much more vigorous renewed linkages coming from surges in trade between the two in the last couple of decades. Like our former PM mentioned, "We can choose our friends but we cannot choose our neighbors."
No country in the world today can survive without their dependence on China in particular, though this situation is changing gradually, which is something India must capitalize on. In the meantime, the geopolitical tensions we are facing with China mean that we cannot have a structured and detailed dialogue with them in the foreseeable future unless the difficulties fade. But, there is a lot to learn from them for the industry and academia to emulate the positive aspects of the successes they’ve achieved over time, though a lot of these successes also have a much avoidable negative background in terms of lack of freedom, democracy and ethical standards that we have in abundance.
MS: India's trade policies and the role of research and analytics - how must India upgrade the same towards a better global positioning?
BNG: Research and analytics are important inputs to any policy and trade is such a complex domain for which these are indispensable indeed. From NITI aayog, we've been promoting the use of evidence based policy analytics and research for many areas including trade and commerce. Much more can be done in this area in the future by developing practices and public reports that can set an example to the rest of the world as to how research and analytics can be leveraged for trade policy.
MS: Aggressive ongoing development at various levels in India (after a pause due to the COVID19 pandemic), amid Sustainable Development Goals (SDGs) and targets towards Net Zero by 2030. Will India be able to meet the target? If yes, how and by what major steps are being taken in the direction?
BNG: India has been a front runner globally when it comes to meeting the emissions targets and other sustainability goals. We are one of the very few countries in the world that have a dedicated SDG nodal center as part of an organization chaired by the top leadership - NITI Aayog. More importantly, we are tracking our progress at state and district levels to monitor and promote further progress so we are on track towards these goals. We have also actively shared our experiences in this regard with our partner countries who have also taken inspiration to progress in SDGs.
MS: Amid the falling rupee, what provisions are being planned by the central government to help MSMEs survive when the imports have been hit due to falling rupee against the greenback?
BNG: First of all we must recognize that this is a global phenomenon and Indian Rupee hasn't depreciated close to as much as many other countries. Therefore, in a global context, our import prices aren't so much more expensive as in many other competing countries. Generally, a falling rupee has benefited the exporters as their prices become lower in importers' foreign currencies. To this extent the MSMEs plugged into export markets are likely to benefit from this situation. Furthermore, this is also an opportunity for the domestic industry to gear up production that can substitute these more expensive imported inputs. This is consistent with the efforts of the government to build an Atmanirbhar Bharat, wherein we are aiming at boosting our exports while reducing our dependence on imports by expanding our domestic production competencies, competitiveness and quality. Production Linked Incentive (PLI) scheme is an important example in this regard, apart from a bunch of efforts to boost MSME exports by raising quality standards and increasing availability of finance.
MS: The MSMEs, sustainability, cutting edge-techs and innovation - what are the futuristic measures being planned as a whole towards better domestic and global trade & commerce via this sector? And also to bring respite to the struggling SMEs and farmers?
BNG: Like I mentioned in response to the previous question, we have several measures in this regard. Exports are being promoted vigorously for better price premium and also to learn from the global markets and competition therein. Access to finance is absolutely essential for the MSMEs both for working capital and for scaling up from micro to small to medium to large eventually. Startup India is another major movement that has led to increasing evolution of startups into unicorns. Quality certification and standards development and support has been predominantly aimed at helping the MSMEs to expand on their exports. While our exports have increased to their all time high level recently, it is also the quality and value premium of the kind of commodities we are now exporting - like smartphones, other electronics etc. FTAs are another major strategy to boost our exports. Nevertheless, there is always a lot more to work on in order to help our ailing MSMEs and farmers. The reforms that may help farmers to modernize and get access to much larger markets are long overdue. MSMEs also need much more support than what they have now to comply with global standards so that they are market ready, and their access to finance needs a much bigger boost as well. Their integration with local, regional and global value chains has to be facilitated effectively, making use of the several other efforts that are underway like PLI, FTAs etc.
MS: What are the reforms that India must be looking at in its new Foreign Trade Policy?
BNG: The changing geoeconomics and geopolitical situation globally throws several opportunities and challenges at us. The new FTP is being calibrated carefully to ensure we maximize the opportunities and minimize the risks arising from the challenges. Global supply chain resilience is a major concern of many countries that may throw a lot of opportunities at us as an alternative hub for goods and services for the world, but we also have to work on investment and business climate that can capitalize on such a huge opportunity of scaling up our production to match the ever increasing global demand. We also have to think about disruptive technologies that have been changing how trade is done. Several such aspects are being considered actively in this context.
MS: India has progressed in the last few years to signing quick FTAs. What kind of FTAs are required in near future and with which all nations, to help revive its economy as well as tide over the current global crisis?
BNG: We are in urgent need of global market access towards FTAs. Despite the fact that import tariffs are low in many countries, the competition is extremely tough and even 1-5% margins matter a lot. When we look at our competitors in many import markets, we are facing much higher tariffs than them because they’ve managed to get market access through FTAs. We’ve been lagging behind in this regard in the past, but we are now rapidly catching up. The FTAs we are now negotiating, including the recently concluded ones, are with countries with whom we have huge complementarities. We do have some sensitive sectors to protect at our end and hence the negotiations are taking into account all such sensitivities and pitfalls of excessive reliance on free trade, but we do need a concrete and rigorous focus on such trade deals with renewed vigor!
MS: Experts warn that the Asian Banks must not hike the lending rates at par with the FED, amid global recession.
BNG: Indeed, raising rates is always like holding a double edged sword- it not only makes it difficult to get credit by the industries but also encourages people at large to save more than invest - which is something that can play a crucial role for our country given their limited presence of commercial banking.
MS: What are the other key measures that India will be looking at to curb the rising inflation and tame the falling rupee vs dollar?
BNG: We are addressing the supply side constraints and challenges to contain the price hikes that arise from shortages of production globally. Containers shortage has been a major concern and a solution for the medium to long term is to develop our own container capacity for example. Another measure used in a calibrated way is to regulate exports of essential commodities- and this may become easier now given the global recession signs that reduce demand for such commodities globally too, easing the pressure on domestic prices thanks to such a reduced demand. Public investments and expenditure to promote efficiency in logistics can drive down the costs further. The new National Logistics Policy and Gati Shakti are effective measures in this regard.
About Dr Badri Narayanan Gopalakrishnan
Dr. Badri Narayanan Gopalakrishnan is the Lead Adviser at NITI Aayog – Government of India, wherein he heads the vertical of Trade and Commerce, Strategic Economic Dialogue and Vision for India@2047. Prior to joining the GoI, he has been an economist working to analyze a wide range of economic (mainly international trade), disruptive technologies, environmental/energy and public health policies. He has informed the process of decision making in several major economic policies such as free trade agreements, technology regulations, etc., both through his academic research and consulting/advisory projects.
Dr Gopalkrishnan has also been a Senior Economist and Affiliate Professor with University of Washington Seattle, Courtesy Professor with Oregon State University, Senior Fellow with European Center for International Political Economy, Brussels, National Council for Applied Economic Research (NCAER) and Center for Social and Economic Progress (formerly Brookings India), New Delhi. He is on the Board of Directors of the British American Business Council. He has also been a consultant with the UN, World Bank, ILO, FAO, WHO, ICRIER, IMF and several other international organizations as well as government/private bodies across the world. He has also been engaged with the startup community across the world as an advisor and co-founder. He had founded a consulting firm named “Infinite Sum Modeling” in 2015, which has a global presence. He has been a consultant to several organizations such as McKinsey, KPMG, PWC, World Bank, UN, ADB, Harvard University, LSE, the Commonwealth Secretariat, etc.
He has published over 150 papers and 8 books cited thousands of times in journals as well as popular media (FT, BBC, CNN, WP, The Economist, etc.) , in reputed journals such as Nature Communication, Energy Economics, Network and Spatial Economics, Economic Modeling, Applied Economics, Agricultural Economics, etc., and presented his work in over 30 countries across the world.
About the Interviewer
Mahima Sharma is a Senior Journalist based in Delhi NCR. She has been in the field of TV, Print & Online Journalism since 2005 and previously an additional three years in the allied media. In her span of work she has been associated with CNN-News18, ANI - Asian News International (A collaboration with Reuters), Voice of India, Hindustan Times and various other top media brands of their times. In recent times, she has diversified her work as a Digital Media Marketing Consultant & Content Strategist as well. Since March 2022, she is also an Entrepreneurship Education Mentor at Women Will - An Entrepreneurship Program by Google in Collaboration with SHEROES. Mahima can be reached at firstname.lastname@example.org
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