In the light of roll out of GST and rapidly evolving nature of globalization, how should India realign its trade policy? Examine.
The Goods and Services Tax in India is being introduced at a time where global trade is fraught with changes and uncertainty. Sluggishness in global growth and more protectionism in trade as reflected in Brexit, restriction of H1B visas, move out of the US from the Paris Climate Agreement and other similar developments point towards the evolving nature of globalization. Apart from dealing with these changes, India also has to factor in the expansionist role of China in International Trade and the restrictions on Qatar imposed by the Gulf Cooperation Council.
GST on the one hand has eased out the inverted tax structure which will now bring in more investors and facilitate domestic manufacturing, the global situation indicates that some established trade relations need to be reconsidered. Some of the re-allignments which could be explored in the trade policy include-
-Exploring newer partnerships in emerging markets like Africa. China has also been seen to increase in trade links with Africa in the recent past and moving focus from Western Partners to the African Market could be of strategic importance.
-Free Trade agreements: The protectionist trade policy of the UK and US has led to the EU to diversify its trade options. The recent mandate in France and the Geman position still show favour for more globalization. FTAs with the EU and the South Eastern Countries could be a counter to the increased protectionism of other partner countries.
– Domestic Trade Infrastructure: The GST clears space for a lot of changes in the domestic trade infrastructure. The focus on Make in India should be renewed and trade opportunities traditionally lost to East Asian countries should be explored with renewed vigour.
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