The India Strategy for Integrating with World Trade.
Strategy For Integrating India With World Trade:
India adopted an all-inclusive program of macro-economic stabilization and structural adjustment in June, 1991.
The objective was to remove controls on industry, external trade and foreign investments and allow a free atmosphere for growth of trade.
However, due to various problems and opposition faced within the country, these reforms could not be immediately implemented to their logical end in different spheres of economic activity.
At best it is still a half-hearted effort. The result is India is not yet able to reach desired goals in its external trade and foreign direct investment.
A sustained rapid growth in exports is the most critical need if the country wants to ensure lasting external viability.
Vigorous efforts are, therefore, necessary to achieve a hasty expansion of exports, especially when one or other difficult international trading environment is brought about by succeeding economic and financial crisis like those in East Asia or in post-Iraq war Middle East.
Also read | The Trends in India’s Balance of Payment (BOP).
There is also the apprehension that East Asian countries may reorient their economic activities away from capital-intensive industries and move towards labor-intensive ones. Such a move is bound to intensify competition in markets that are crucial for Indian exports.
It is therefore imperative that as early as possible various transaction costs incurred by our exporters are cut to a minimum.
Transaction costs originating from enforcement of various rules and regulations for obtaining licenses, customs clearances, refund of duties, infrastructure constraints, etc. are some such unnecessary costs.
These affect export performance adversely. Although export transactions are being simplified and rule and regulations are being cut down, the pace is very slow. The changes ought to be made quickly without losing any further time.
Petroleum and allied products have a comparatively large share of India’s total import bill. Global prices of these goods keep on fluctuating reflecting general world reversionary conditions.
There is much uncertainty about the future movements of international prices of petroleum. Under such uncertain trends, there are always significant downside risks country’s balance of payments.
Also read | What is Balance of Payment Accounting?
Therefore efficient use of these products is to be encouraged on war-footing while removing all distorting-policies in remaining energy sectors.
Tourism was major source of buoyant invisible earnings in the past. However, in last few years, growth of tourist arrivals and earnings has not been satisfactory. This is in spite intense efforts by the Center and State governments to accelerate expansion of tourism in India.
Priority needs to be given to banishing irritants like delayed air and rail travels, unclean hotels, lack of quick and cheap international communication.
The entire tourist industry needs a complete overhaul if we want to attract foreign tourists and increase our dollar earnings. Airport systems, entry and exit procedures also need to be greatly improved.
There is certainly great potential for higher direct foreign investment from major companies of the world. What is needed is our having a studied positive stance towards FDI.
For this, government must give the highest priority to get rid of red tape at every stage of FDI process. The red tape continues to be cited as the main culprit and different for many potential foreign investors.
Also read | The different types of Leases.
Also, all policy impediments in the infrastructure sectors, which can absorb large FDI, need to be put to an end on a priority basis.
To succeed in international arena and to become a foremost market player at global level, India must bring to perfection every type of basis infrastructure to match them to the world standards.
The financial crisis in East Asia and post Iraq-war Middle East has brought into focus the challenges and risks involved in getting involved into free global capital movements. Such crises clearly show that capital account liberalization has to be carefully calibrated to minimize the risks of disruption against increased uncertainty.