By Pradeep S Mehta
Over the last two decades, India has become an important global player with its robust economic growth encompassing a unique demographic advantage provided by its population of around 1.25 billion. Today, India’s economy is the third largest in the world as per purchasing power parity and 11th largest in terms of nominal gross domestic product.
It is expected that by 2030 India will be the third largest economy of the world in nominal term, which is a huge opportunity for a technologically advanced and trade- and investment-oriented country like Norway. A huge market for doing business and that should be leveraged for multiplier effects so as to address future challenges to regional and global public goods such as food, water, energy.
The new Indian government has identified ‘Trade’ as one of the five Ts for resurrecting ‘Brand India’. However, the government is expected to face a huge challenge of aligning domestic development objectives with its international commitments. Furthermore, India is expected to take leadership in voicing the concerns of the developing world, at various international fora, be it ‘equity’ in climate change negotiations or ‘balance’ in multilateral trade negotiations.
Therefore, the new government should think strategically to leverage the benefits of the international trading system in particular and the overall management of regional and global public goods in general so as to achieve its national objectives of development.
India should adopt a two-pronged approach for trade and investment promotion, so that supply- and demand-side constraints are simultaneously dealt with. It should aim at implementing domestic policies to enhance supply capacity and address the demand-side of trade and investment by proactively engaging in international trade negotiations, both at the multilateral level and bilateral/regional level. The latter can be achieved by enlarging its scope of engagement in multilateral, preferential as well as plurilateral trade negotiations, while the trade policy should cater to the first.
However, India’s trade policies of the recent past have been marred by being a stand-alone policy and lacked coherence with other major macroeconomic policies such as competition, investment. For example, there is not much emphasis on export orientation and/or employment generation aspects of foreign direct investment. It is largely isolated from its negotiations of bilateral, regional and multilateral trade agreements. In order for inclusive growth to be realised on the ground, the new trade policy which is expected to be announced in August 2014, needs to address such lacunae by following a whole-of-government approach.
Thus, the new trade policy should not follow the existing practice of just having a set of export-enabling instruments but should look at how trade and investment can be mainstreamed into national development. It should be a major instrument for domestic reforms, particularly in areas of trade- and investment-related regulations such as standards, intellectual property rights, so that in future India can negotiate its trade agreements from a position of strength and with its investment needs in mind.
.It is in this context, trade and investment ties between India and Norway should gain further traction. Given that the cooperation between Norway and India is well established through various institutional frameworks, it is most likely that India will seek to further strengthen this cooperation in various areas of mutual interests. For instance, Norway can contribute hugely as it has experience, expertise, resources, and technology for the betterment of India’s food, water and energy security.
Other broad areas of mutual interest could be sustainable development of mountainous agriculture, fisheries, and animal husbandry; transfer of new technologies in shipping, information technology enabled services, and in areas of hydrology and oceanography; in the production of bio-medical and bio-engineering products, and in defence production.
Furthermore, for Norway, India could act as a hub for trade and investment in the Indo-Pacific region. This is an opportunity because India is expected to forge close cooperation with its neighbours and other countries in this region. Since India is yet to conclude its trade negotiations with the European Free Trade Area, where Norway is an important member, it (India-EFTA FTA) should not just be looked at as another instrument for market access and foreign direct investment.
For India, the importance of EFTA (and other such free trade agreements which are either being implemented or under negotiations) has become more crucial because of expected negative impact of mega free trade agreements such as Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Partnership on its economy, particularly on account of higher trade-related regulations which are expected to be set by these mega FTAs. India should look at EFTA (and also the EU-India free trade agreement and its other FTAs) as an opportunity to enable its standards and IPR regimes to future requirements of trade with the developed world, particularly in respect to their alignment with non-tariff measures for addressing domestic public interests.
On the other hand and as India is a party to Regional Comprehensive Economic Partnership among Australia, China, Japan, New Zealand, South Korea and the 10-member ASEAN group of countries, Norway should look at how India-EFTA FTA could be leveraged through India as a hub for enhancing its trade and investment in the Indo-Pacific region. This will help both countries to further their penetrations into regional and global value chains.
To conclude, this is the right time for India and Norway to further develop, intensify and strengthen mutually beneficial cooperation in areas of complementary interests through strategic use of their expertise, resources and locations. Knowledge sharing for sustainable development should be one of the most important pillars of this cooperation. As a key and strategic step towards that direction, they must conclude the negotiations of India-EFTA FTA with a built-in agenda for reviewing its implementation and enlarging its scope and coverage.
* Secretary General, CUTS International (www.cuts-international.org), a think- and action-tank on trade, regulations and governance, having long-term partnership with Norway (email@example.com(firstname.lastname@example.org ). Read the author’s full profile at http://www.pradeepsmehta.com/Profile.htm