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As India keeps out of RCEP, foreign minister Jaishankar bats for self-reliance

S Jaishankar speaking at Deccan Dialogue organised by ISB
S Jaishankar speaking at Deccan Dialogue organised by ISB

In the name of openness, India has allowed subsidised products and unfair production advantages from abroad to prevail, External Affairs Minister S. Jaishankar said. At two virtual events held this week, he explained why India has chosen to stay away from the China-led Regional Comprehensive Economic Partnership (RCEP), which was signed on Sunday. Jaishankar articulated the NDA government’s desire for self-reliance (Atmanirbhar Bharat) — reduced dependence on imports — in various sectors of the economy, including the Information Technology and Communications (ICT) sector, a field that has been dominated by China for many years.

Speaking on Monday at Deccan Dialogue, a virtual event organised by the Indian School of Business (ISB), Jaishankar criticised India (read: previous government) for having determined success of the economy using the GDP growth rate. “We not only failed to develop the deep strengths that a large industrial economy like ours should have. We actually created an employment challenge by becoming over-dependent on imports,” he said.

Jaishankar said the dependence on imports was justified “by the mantra of an open an globalised economy”. “It is quite extraordinary that an economy as attractive as India allowed the framework to be set by others. With the passage of time, our predicament became increasingly serious,” he said.

The minister, perhaps to justify critics accusing the government of protectionism, said that this is not an issue of trade or even economics.

“As the world of technology applications and global production becomes more integrated, choices today have a much deeper strategic implementation. The limited progress we have made and the gap with our real potential puts us in an especially difficult position. As it is, the effect of past trade agreements has to been to deindustrialise some sectors […] Without exaggerations, what we decide now will determine whether India will become a first-class industrial power or not. That is why the outlook of Atmanirbhar Bharat is so crucial today” — S. Jaishankar, External Affairs Minister

Furthermore, at an event organised by the Centre for European Policy of Studies, Jaishankar elaborated the government’s position: joining RCEP would have “negative consequences” for India, he said.

India’s concerns with RCEP, and quest for ‘self-reliance’

RCEP, which was in the works for nearly eight years, initially included 16 countries, including India, ASEAN countries, Australia, China, Japan, New Zealand and South Korea. However, India walked out of the negotiations in November 2019, concerned about the impact of RCEP’s impact on the Indian agriculture industry.

Another fear was that the elimination of tariffs would lead to Indian markets being flooded by all kinds of Chinese goods, thereby exacerbating an extant problem. Per government data for 2019-2020, 37% of electronic components imported by India came from China.

This fear was compounded over the past few months as both countries engaged in a series of clashes on the Line of Actual Control. India resultantly took a series of steps, some of them token ones, against Chinese companies. It has banned over 200 popular Chinese-owned mobile apps. Its telecom industry is increasingly avoiding Chinese equipment while developing the domestic 5G network. Both developments are also seen in light of national security concerns, as has been elaborated by Jaishankar at Deccan Dialogue.

Self-reliance in the ICT industry: In similar vein, India is currently working on developing its indigenous manufacturing capabilities through the Atmanirbhar Bharat platform. Just this year, the government has introduced several production linked schemes (PLI) schemes for electronics manufacturing; one of these schemes is launched for the production of mobile handsets. These schemes will lead to a minimum of incremental production worth ₹10.5 lakh crore over the next four financial years, of which around ₹6.5 lakh crore’s worth will be exported, IT Secretary Ajay Prakash Sawhney estimated in a recent Rajya Sabha TV interview.

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