Straight from the Specialists
(Any opinions expressed here are those of the author and not of Reuters)
As it celebrates its 65th year as an independent country, India seems poised for an economic take-off. Already, this south Asian country is the world’s largest democracy, has about the same number of middle-class citizens as the United States, and has the planet’s tenth largest economy.
But India still has a long way to go. An average citizen lives on less than $10 a day and its per-capita gross domestic product is less than half that of the other Asian giant, China. For India, moving to the next level is going to require a potentially painful but absolutely necessary engagement with the global economy.
That’s the topic that a congressional committee considered earlier this month in a hearing carefully monitored by most major industries doing business in India (more recently, Deputy Director of USTR Demetrios Marantis faced tough questions from senators in a separate hearing). The consensus among those speaking out on the issue is that if India seeks to drive innovation, it will first have to bring many of its laws and policies — particularly those concerning trade and intellectual property — into line with those of the developed world. But in the end, the real beneficiaries of a more open India won’t be Americans or residents of other already wealthy nations but the Indian people themselves.
Although Indian governments in the 1990s and early 2000s took some important steps toward openness, much of Indian trade policy remains mired in 18th-century mercantilist economic theory: tariffs, subsidies, and “buy local” requirements that make it hard for the country to compete in the global economy. While these policies certainly help some incumbent Indian business owners, they isolate the rest of India’s economy from the world. And the Indian people, in any case, have shown that they are unnecessary.