How Make in India can be bad news for trade deal with Australia

Brookings India Chairman Vikram S Mehta explains the reason for tensions over India’s trade and manufacturing policy.

In a story in the Australian Financial Review on why Australia’s prospects of negotiating a trade agreement with India are being threatened by differences within the Indian government over how to implement Make in India, Brookings India chairman and senior fellow Vikram Mehta said the Indian government believed that Make in India was about creating a more competitive operating environment for both foreign and domestic companies.

Almost two years after the Indian government announced its “Make in India” policy its flagship manufacturing revival plan there is a wide-ranging debate about how it fits with trade liberalisation and whether it is the best way to generate jobs for the 1 million people who join the workforce each month.

Mr Mehta said the main tension over trade and manufacturing policy was in Indian business rather than the government because companies believe they are already facing unfair competition due to dumping from China and other countries.

“At a time when Make in India is happening there is a concern that any [trade] agreements that we reach should be supportive of our desire to expand manufacturing,” India’s top foreign policy official, S. Jaishankar, said. “Reconciling what are domestic priorities with what are external priorities, that is the challenge.”

Prime Minister Narendra Modi and then prime minister Tony Abbott agreed in late 2014 to aim for a trade deal within a year in an ambitious bid to add to the tally of deals already won by the Coalition government with South Korea, Japan and China.

Read the full story here.