The economist in Prime Minister Manmohan Singh has donned his best bib and tucker again, and is ready to provide a major impetus to India's trade and economy.
On Wednesday, the prime minister took several steps towards opening up the Indian economy further by announcing a series of economic co-operation pacts and free trade agreements.
The message going out from the Prime Minister's Office was that imports must be allowed freely from countries including Bangladesh, Singapore, Mauritius, Myanmar, Sri Lanka, Maldives, Nepal, Bhutan and Pakistan.
The prime minister told a meeting of his Trade and Economic Relations Committee that India's neighbours should get a bigger stake in the country's economic growth by benefiting from it.
The clarion call comes barely two weeks ahead of Singh's visit to Dhaka to attend the SAARC (South Asian Association for Regional Cooperation) Summit.
In a significant move, India has decided to speed up Free Trade Agreements with its neighbours as part of the efforts to promote South Asian regional block. In doing so, India has reaffirmed its commitment to the South Asia Free Trade Agreement (SAFTA).
Dr Sanjaya Baru, while briefing the media in New Delhi on Wednesday, said: "This is the major decision taken by the United Progressive Alliance government in the last six months."
The new message
Baru said that from the Persian Gulf to the Malacca Straits, India is seeking free trade agreements and a free flow of investments in trade. The liberal policy will apply to ASEAN (Association of South East Asian Nations) and BIMSTEC (Bay of Bengal Initiative for Trade and Economic Cooperation) countries too.
'Import more and more' is the message to the private enterprise in India. The government's new thinking is actually a two-pronged plan:
- India wants to play a bigger role in South Asia and the new policy of involving neighbouring countries in India's economic growth helps as trading partners increase their stake in India -- although it is a tough task to maintain trade balance after opening the doors wide.
- Second, since the fundamentals of the Indian economy are getting ever stronger, New Delhi can risk a bigger challenge of allowing more imports. This calculated risk is aimed at helping India take a quantum leap and grabbing a bigger pie of global trade.
Some problems and irritants with neighbours do exist and the core group in the PMO has discussed these with inputs from trade representatives.
For instance, take the case of Bangladesh. Dhaka has a huge trade deficit with India, but India can help raise Bangladesh's revenues if it allows transit rights to New Delhi to send goods to North Eastern states.
Myanmar, too, wants to export pulses (rajma) and wood to India, if New Delhi reduces tariffs.
Similarly, Pakistan which has steadfastly refused transit rights to India to send goods to Afghanistan and eventually to Central Asia, can be urged to allow this mutually beneficial plan to go forth.
India also has some tricky issues to resolve with Pakistan and Bangladesh in the textiles sector, too.
The Indian government, however, is not sitting idle to wait for all to arrive at a mutually agreeable settlement of such thorny issues. Instead it has decided to go ahead and tackle the issue at the flanks by opening its doors to neighbouring countries in certain -- and crucial -- sectors.
According to one estimate, a liberal trade policy will certainly help Bangladesh, Bhutan, Nepal and Maldives as they can attach their bandwagon to India's trade star.
Background
Since May 2005, a core group of powerful people in the government has been discussing the mechanism of promoting trade and economic relations with India's neighbours and countries important to New Delhi. The Trade and Economic Relations Committee, headed by the prime minister, includes -- as members -- the ministers of finance, commerce and industry, and external affairs. Deputy Chairman Planning Commission Montek Singh Ahluwalia is also a member.
Secretaries of the concerned departments and the members of Economic Advisory Council too participated in the seven meetings that decided 'big ticket' economic measures -- announced today -- to boost the international trade of India, particularly with neighbouring countries.
It is believed that all the departments have been given express orders not to put up any bureaucratic hurdles in the process to enhance economic relations with the neeighbouring countries.
Baru said that India has already entered into an FTA with Sri Lanka, while a Comprehensive Economic Cooperation Agreement has been singed with Singapore.
The Trade and Economic Relations Committee has approved early completion of an India-ASEAN Free Trade agreement too.
India is also negotiating such agreements with members of Gulf Co-operation Council, the African Union, and the European Union.
India has discussed proposals with South Korea and Israel to have FTAs. The TERC also discussed the status of the negotiations and India's stance at the World Trade Organisation talks.
The TERC also wants investments that will facilitate more imports from Pakistan, Bangladesh and Myanmar.
New projects, new pacts
The prime minister has asked the Punjab government to speed up the project to widen the road between Wagah border and Amritsar. Pakistan has already started the work on its side of the border. This will facilitate trade over land.
Since long there have been deliberations over making India's diplomatic relations and strategic interests coincide with the nation's aim of increasing its share in the world economy.
Baru also said that at the initiative of President Dr A P J Abdul Kalam, the Indian government is taking up the Pan-African Network Project to bridge the digital divide in Africa.
First time, with help of Indian satellite technology, tele-education and tele-medicine projects will be taken up in 53 African countries.
On Thursday, a memorandum of understanding, will be signed between India and the African Union for the project which will enable 53 heads of African nations to have video-conferencing facilities and connectivity.
