India’s free trade agreements with developed countries will greatly facilitate its entry into the supply chains of multinational companies and significantly push up exports, Arvind Virmani, member, NITI Aayog, said in an interview to ET.
Outlining the challenges and opportunities before India as it strives to become a developed nation by 2047, Virmani said global inflation and oil prices are expected to cool over the next one year and that will have a positive impact on the Indian economy with an expected enhanced capex from the private sector.
“The big export boom, whether in Asia, Malaysia, Thailand or South Korea since the 1980s has all been led by MNCs. Since supply chains of MNCs now constitute something like 50% of the world exports, FTAs with developed countries will greatly facilitate the entry of India into their MNC supply chains, push labour intensive manufacturing and increase exports,” he said.
According to Virmani, it is very important to diversify supply chains out of China because of the recent supply shocks and the direct threat that India faces from its neighbour. “The main reason is that we are already too enmeshed in the Chinese supply chain," he said.
According to Virmani, it is very important to diversify supply chains out of China because of the recent supply shocks and the direct threat that India faces from its neighbour. “The main reason is that we are already too enmeshed in the Chinese supply chain," he said.
"Further, due to the geo economic coercion and a direct security threat, it's too dangerous for us in the future and hence we want to reduce dependence on at least critical inputs from China,” Virmani said, hence the decision not to join the Regional Comprehensive Economic Partnership and instead go for FTAs with developed nations.
Speaking on the revival of the private sector investment to match the government’s enhanced capex in 2023-24, Virmani said the multiple waves of the pandemic, and each happening at different times in different parts of the world, has messed up the whole demand supply global equation much more than anticipated, leaving businesses confused on the future of their investments.
Read more at: https://economictimes.indiatimes.com/epaper/delhicapital/2023/apr/28/et-corp/ftas-will-help-india-join-mnc-supply-chains/articleshow/99826037.cms
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