CHENNAI: taking a dig at the US’ protectionist policies, Reserve Bank of India Governor Urjit Patel said US firms like Apple and IBM would not have grown to become the conglomerates they are today, had they sourced all their requirements locally.
“Where would Apple be, where would Cisco be, where would IBM be if they were not sourcing the best products and talent from across the world? And, if policies come in the way of that, then the big wealth creators in a country that advocates protectionism are ultimately affected,” he said after delivering the Third Kotak Family Distinguished Lecture at the Columbia University’s School of International and Public Affairs in New York on Monday.
His comments come in the wake of the US and Australia tightening their immigration policies in a bid to force companies to cut down on outsourcing and to hire locally.
He also cautioned supporters of such policies that using trade instruments for protectionism could take a country away from its growth path.
Patel, however, expressed the hope that the US policies will eventually be eased. “I don’t think that we have heard the last word on US policy talk about this because there is a push back internationally that the world has benefited from an open trading system.”
According to Patel, the calls for protectionism are on account of equity and domestic distribution issues. These, he noted, could be addressed through domestic fiscal policy such as taxation and income transfers rather than resorting to reversing liberal policies.
While Finance Minister Arun Jaitley had warned that such policies could hurt global economy, Commerce Minister Nirmala Sitharaman reminded Trump that several big US companies are in India, too.
“They (US companies) are also here (in India). They are earning their margins, they are earning their profits which go to the US economy,” she said.