Explain the objectives of India's foreign trade policy.
Answers
India has been increasingly shifting towards higher levels of protectionism in order to make improvements to its economy. Like those of many other countries, India's trade policy is aimed at increasing the country's exports and its share of global trade. Thus, stringent regulations on imports have been put in place. In some cases, domestic businesses are forced to demonstrate that they export as much as they import in order to get licenses for their cross-border operations.
To achieve its objectives, India is currently revamping its manufacturing sector by offering incentives to local manufacturers and international manufacturers who chose to conduct production activities within the country’s border in what is known as the
"MAKE IN INDIA" Initiative. Additionally, India is working to improve its trade environment by focusing on economic reforms geared towards enhancing competition and innovation within its economy.
India’s trade policy is also informed by the need to industrialize the country and create jobs for its population. Thus, a social perspective is also being addressed through policies aimed at boosting manufacturing and exports. Dividends of the policy are expected to be felt socially through job creation and improvements in the country’s standards of living.
The objective of any country's trade policy must be economic growth.
As a developing economy, India must balance protectionism with free trade. India can benefit a great deal from free trade because of its unique resources. Specifically, India's large population of educated English-speakers is a great resource for it because it is the only place where such people are available at comparatively low wages.
On the other hand, it may be necessary for India to engage in some protectionism. This is so that it can protect its infant industries. So India must, for example, decide if (and how long) it will continue to ban foreign investment in retail businesses. And it must decide if it will continue to use anti-dumping measures to aggressively inhibit trade.
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