NEW DELHI: The Centre needs to review free trade agreements with countries like South Korea and other ASEAN countries that have not been very beneficial for India in terms of market access, Sanjiv Puri, Chairman of Confederation of Indian Industries (CII) said in an interaction with this newspaper. However, at the same time, these trade pacts with the UK, EU, UAE and Australia, among others, have been very helpful for the Indian economy, he highlighted.
The Global Trade Research Initiative (GTRI) based in Delhi reported that India’s merchandise trade deficit significantly increased by 302.9% with ASEAN countries and by 164.1% with South Korea. This comparison was made using data from the pre-Free Trade Agreement (FTA) period (2007-09) and the period between 2020-22. It is noteworthy that India had established trade agreements with these countries in 2010-11. During the mentioned periods, India experienced a higher growth rate in imports compared to exports when trading with these nations.
Speaking of the production linked incentive (PLI) scheme, he said that the scheme is possible in sectors like textiles and toys, given the proven success in new age sectors and in some traditional sectors.
“PLI schemes have been there in new age sectors and in some traditional sectors also, like food processing etc. So, given the success, we can take the lesson from there and also construct them for labour intensive sectors and link them to the employment index,” he added.
In response to a question on lackluster growth in the manufacturing sector, Puri said, “With all the policy interventions that have happened in recent years, where we have good balance sheets in the financial sector, corporate balance sheets are better, corporate income tax has been rationalised, PLI schemes, free trade agreements, all these have provided impetus to manufacturing and we are seeing it going in the right direction.”
“We now need to build on this momentum which will continue on the correct policy measures. The next set of reforms will strengthen the competitiveness of the manufacturing sector which is to do with reforms like factors cost, land, labour and to build consensus over that. Then it is about continuing the ease of doing business and making ‘Make in India’ initiative more competitive,” Puri said.
Meanwhile, he expressed hope about revival in rural consumption in view of favourable monsoon prediction.