Recently Narendra Modi was all about ‘business in India’ on the platform of Global Economic Forum, his idea of opening up India for business was real tool in paly in Narendra Modi’s ‘Make in India’. But with the cloud of re-elections looming overhead, it seems Modi’s business foot is faltering a bit.
The decision of raising import duties on parts for automobiles, cameras, televisions, and electricity meters is leading into a trap of protectionism. History is repeating itself when in order to help local and small industries. Modi like his predecessors Nehru and Indira Gandhi is suffocating India’s trade within high rate of imports at the same time discouraging Foreign Direct Investments. Sadly, this won’t help the cause of India which needs to raise its growth rate to a double digit.
The consequences of turn -about to protectionism is very deep reaching, increasing the price of imports may help the small Indian businessman by removing competition for now but in the long run there is no guarantee that their efficiency wouldn’t decrease. "A hike of 15 to 20 percent is not much for Chinese and South Korean companies — they can easily absorb it. This will end up hurting Indian competitiveness more than the government imagines" is mentioned by Bipul Chatterjee, executive director of CUTS International. Also India is degrading its position in the World Trade Organization.
Along with it comes the blow risking friendship with current business allies like US, Germany and losing out to rival China. With the news the countries are reacting in their own way. Our volatile ally US President Donald Trump has resorted to tit for tat politics on India’s duties on motorcycles, Germany’s Ambassador Martin Ney questioned the decision. According to sources US Commerce department they are examining welded pipes from India.
Therefore India’s new idea of protectionism will have interesting results in the future.
A hike of 15 to 20 percent is not much for Chinese and South Korean companies — they can easily absorb it. This will end up hurting Indian competitiveness more than the government can imagine.
