India’s voters handed a sweeping mandate to India’s pro-business government in their recent elections, sending the country’s communist party to defeat.
I asked Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics, what this means for the Doha round, a global round of trade talks that fell apart last year.
AS: The answer is that at the very least it is not bad news, and probably good news because the new government is likely to push ahead with greater reforms more broadly. That said, don’t expect Doha or trade liberalization to be high on the reform agenda of the new government. In other words, the new government will be less recalcitrant but not necessarily more proactive on Doha.
JW: If trade liberalization is not high on the priority list, what is as it pertains to making India more “open for business”?
AS: There will be a push to open Indian financial markets and allow more foreign direct investment in finance, retail, power etc. Remember that Doha focuses on bringing down bound tariffs so that is not where the real liberalization action is.
JW: Basically we want your money but not necessarily your goods?
AS: FDI is about a lot more than money—it is about technology, managerial efficiency, better practices, etc. And note that India even on goods has been liberalizing unilaterally albeit at a gradual pace.
— Jon Ward, White House reporter, The Washington Times