Just like Toyota, Hyundai and Honda cars are present in every road of South Asia, there is an Indian automobile which is also omnipresent. Have you seen the rickshaws and the tuk tuks in Vietnam, Cambodia, Malaysia and Thailand? They are all made in India and they are all made by Bajaj. They have overcome challenges and come out of intense international competition to emerge as the leading exporter in this section. So, if Bajaj can do it why can't others?
India is shying out of signing free trade agreements with individual nations and with regional trade conglomerates because we fear cheap goods from China and cheap dairy products from Australia and New Zealand will flood our market and kill our local industry. While on the face of it, it may sound very noble and patriotic but the fact of the matter is we are gradually isolating ourselves into a cocoon, impervious to both imports and exports.
If a product A manufactured in India and marketed for Rs. 100 comes from China at a discounted price of Rs. 90, we immediately put a 20% trade tax on it so that now it costs Rs. 118, thus protecting the local manufacturer. So whose interest is being protected......the manufacturer's, the guy who is so inefficient that he can not compete without the government's help. But, and a very important but, whose interest are we sacrificing ........the consumer's, yours and mine! We could have purchased product A for Rs. 90, thus saved Rs. 10 and purchased product B, C and D also! So by protecting an inefficient industry the government is not letting other smaller businesses thrive. These businesses could have prospered by our patronage, employed more people, and added to the productivity of the nation! But we are sacrificing all this to help an inefficient industry.
Amul is a multinational company with a diversified product range. Why should it need government protection against dairy imports from Down Under and Kiwi land? Are Harley Davidson and our locally manufactured two wheelers even remotely comparable? They are in different price range, catering to different consumer sections and still we insist on taxing them astronomically. If the world has opened up to our two wheelers it is because they provide excellent value for money. If other industries want to enter the world market they too will have to do the same. How long do they intend to use crutches of trade taxes?
The Regional Comprehensive Economic Partnership (RCEP) trade block is a group of 16 countries and we are negotiating with them since 2012. Do we look like a confident trading nation if even after seven years we are not yet prepared to open up our economy to this group? After the demise of EU and Trump mauling of NAFTA this RCEP is the coming together of the most vibrant economies of the world. Can we afford to miss the economic bandwagon and isolate ourselves from this growth opportunity?
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