NEW DELHI: Indian Prime Minister Narendra Modi has championed free trade in global forums over the years, but his record back home appears to be one of rising protectionism.
The government has increased import tariffs over the last two years to curb cheap goods from abroad and support small- and medium-sized local manufacturers. In November, Modi pulled India out of the world’s biggest regional trade deal. And earlier this month, Finance Minister Nirmala Sitharaman proposed in her budget to change rules that will allow the government to ban the import of any goods it deems harmful to domestic industries.
Sitharaman also raised import levies on medical equipment, footwear and furniture in the budget, and said the government will strengthen rules to allow for additional levies to be imposed when imports of some goods surge significantly.
“The trade measures announced in the budget are indeed somewhat worrying,” said Pravin Krishna, a professor of international economics and business at John Hopkins University in Washington. “They indicate a backslide of the liberalisation process that began three decades back.”
Government officials deny that the nation is becoming more protectionist. “After the global financial crisis the trend toward globalisation has actually sort of reversed across the world,” said Krishnamurthy Subramanian, the chief economic adviser in the Finance Ministry.
Trade tensions between the US and India have been simmering for a while, with president Donald Trump complaining about tariffs as high as 100% on Harley-Davidson Inc motorcycles.
Trump is due to visit New Delhi later this month, by when India hopes to have a trade pact with the US and sweetened its offer for market access to American products. But any substantive agreement looks unlikely, with Trump saying he’s “saving the big deal for later on”. —Bloomberg
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