CLASH OF HINDUTVA ANDTRADE POLICY

ITH INDIA’S EXPORTS shrinking for the third straight month, the commerce ministry rushed the publication of its long- delayed five-yearly foreign trade policy. The ministry tried to make up for its tardiness by presenting a rather ambitious plan: to double exports to $900 billion by 2020. It expressed pride that for the first time, India’s foreign trade strategy would be aligned with other government economic pro­grammes like Make in India, Digital India and Skills India. What it has not factored in, is the Hindutva agenda, which threatens to put a spoke in the wheel of development.

The B JP-led state governments’ imposition ofban on cow slaughter in Maharashtra and others runs smack into the commerce ministry’s plan to create jobs and increase exports by promoting trade in leather goods. This clash of economic policy with religiosity provides yet another example of the ruling B JP’s penchant for culture war, threatening to undo Narendra Modi’s development plan.

The trade policy was unveiled days after the ban on cow slaughter and beef import introduced in Maharashtrabegan to spread to other B J P-ruled states. Placing the imprimatur of the central government on that trend, home minister Ra- jnath Singh declared that “cow slaughter cannot he allowed in this country. We will use all our might to ban it”. Another BJP stalwart even demanded the humble cow be renamed as “Rashtra Mata” — mother of the nation. A misplaced re­ligious sentiment (Hindus have been consuming beef for centuries) has now been raised to the level of state policy — negating the brave rhetoric of progress for all Indians.

It is thus ironic that the newly unveiled foreign trade policy singles out leather export as an area deserving special sup­port. The leather sector already employs 2.5 million workers and the rising value of Indian leather and footwear exports

Ban on cow slaughter in BJP-ruled states negates the Modi govt’s intent of supporting the leather industry

for important destinations as the US. While entirely laudable, whatthe ministry neglected to note is that pliable cow hide, rather than harder buffalo leather, is needed to manufacture quality garments andfootwear. By shutting down abattoirs for cows and bulls, the government is threat­ening to stunt growth in of one of its self-identified promising areas. India does not lack skilled workers in leather goods, but growth has been blocked by a shortage of raw material. Last year, industry officials said that in order to meet the export target of $14 billion by 2016 -17, the sector would have to double its production of 2 billion square feet of leather Instead, thanks to the ban, the industry will face a reduced supply (Maharashtra alone supplied over 15 per cent of cow hide) and meeting its existing commitments may require it to import semi-processed cowhide from Africa at more than double the price. Not a recipe for success in any business.

India’s chaotic policy-making offers a remarkable contrast with China’s sure-footed planning. As the world’s number one exporter, China accounts for 11.74 per cent ofthe world’s merchandise trade (compared with India’s 1.66 per cenfi and has launched new initiatives to boost trade in order to support its slowing economy. Prime Minister Li Keqiang said the government would adopt policies “to allow our industries to charge out into the world unfettered and rise up through facing competition on the global stage”.

While India, lacking infrastructure, technology and skilled workers, struggles to grow its manufacturing indus­try, the Chinese government at different levels is proactiveh planning for the coming labour shortage. Recently Guang­dong province announced plans to offer sops to 2,000 manu­facturers intending to install robots on their production lines. Though seen as a random coincidence, the divergen: concerns of the two nations over cows and robots, perhaps explains their different growth trajectories.

 

Trade Truths

INDIA’S FOREIGNTRADE

policy (FTP) 2015-20, an­nounced on April 1, in ad­dition to regular features like market and product incentives and sops, talks about leveraging Modi government’s flagship pro­grammes Make in India, Skill India and Digital India to push the country’s foreign trade in the next five years.

On the face of it, there is nothing new about linking major policy announce­ments with the Prime Minister’s pet initiatives. The railway budget had its share of Make in India plans, while the Skill India and Digital India pro­grammes found prominent mention in the Union Budget speech.

A closer look, though, tells a different story. While the Make in India campaign aims at improv­ing the manufacturing capabilities of Indian industry, Skill India is all about providing necessary workforce to aid increased industrial or manufactur­ing activity. Digital India is expected to speed up business transactions, regulatory clearances and payments by use of elec­tronic channels.

By emphasising the need to link FTP with these programmes and create an Export Promotion Mis­sion, the government is of­
fering long-term solutions to the three problem areas — manufacturing capa­bilities, skilled manpower and trade facilitation, all key to overall competitive­ness — before the Indian exporters.

The candid admission that there is a lot of room for improvement in these areas also explains another assessment made in the FTP statement: That government subsidies and sops alone cannot push for­eign trade beyond a point in a globalised world.

The FTP goal of dou­bling India’s merchandise and services export from $465.9 billion in 2013-14 to $900billion and raising

The target India has set to increase its share in global trade to over the next five years

India’s share in global trade from 2 per cent to 3.5 per cent in the next five years would be possible only if Indian exports become globally competitive. The role of the nodal ministry

  • the commerce ministry which prepares FTP — in fulfilling these aims is limited. Hence the attempt to involve state and Union territory governments and various Central depart­ments and ministries

in the process of foreign trade through the Export Promotion Mission.

The ministry has also hinted that the policy is a pointer to the direction export promotion efforts will have to take in future

  • towards tackling more fundamental problems than announcing incen­tives and subsidies.

The FTP statement reveals that India has not been able to take full advantage of its free trade agreements with Korea, Japan and ASEAN. And the reason was not always tariff difference. It was competitiveness or rather lack of it. What FTP reveals was never a secret. We always knew the problem, and the solution. What was missing was concrete ac­tion. —Joe C. Mathew