The new government must take quick decisions on a number of pending trade and foreign policy issues, including forging of sustainable export and industrial policies, framing of a trade agreement with the US to avoid further bilateral skirmishes, taking a final position on the mega trade pact being negotiated with China, and future of oil imports from sanctions-hit Iran.
“The previous government had put off decisions in a number of crucial areas promising that that they would be taken up after elections. Now that the BJP is in power again, quick resolutions of the issues would be expected,” a government official told BusinessLine.
Irrespective of whether outgoing Commerce and Industry Minister Suresh Prabhu will be given the responsibility of heading the ministry once again, India’s trade partners would be expecting continuity in policies.
The US, for instance, will be expecting an early decision on sticky issues such as import duties on telecom and IT equipment, and price caps on medical equipment. “The US delivered on its informal assurance that the Generalised System of Preferences (GSP) scheme for Indian exporters will not be withdrawn before the election results.
“Now it will want the BJP, which has been re-elected, to deliver fast on its key demands such as lowering import duties on smartphones and price caps on medical devices. There will also be pressure to re-work e-commerce rules,” the official said. In fact, US Secretary for Commerce, Wilbur Ross, who was in New Delhi in May, had said that he applauded India’s commitment to address some of the trade barriers (faced by US companies) once the government is re-formed.
The government will also now have to clearly state its policy vis-à-vis oil imports from sanctions-hit Iran. After the US refused to extend the sanctions waiver for India and a few other countries, India stopped oil import from Iran in May. But former Minister of External Affairs Sushma Swaraj has assured the Iranian foreign minister that a decision on oil imports would be taken after the elections.
Framing a suitable export policy is also long overdue, especially with continued unstable export performance and negligible growth in April 2019. There is also a need to replace WTO non-compliant export sops with other incentives. The ratification of the new industrial policy to increase foreign direct investment to $100 billion annually, and doing away with regulatory hurdles, are the other issues to be tackled as it had been put off for the new government.
Pressure will be high on the new government to take a final decision on whether it wants to participate in the RCEP by removing duties on most items imported from all members, including ASEAN and China.
“The re-formed government cannot buy more time by saying it is new because it is actually not and is well-versed with all intricate issues involved with the pact,” the official said.