NEW DELHI — A few weeks ago, India and the United States agreed to remove quantitative restrictions on imports between the two countries. New Delhi will do away with curbs on 714 items this April and on another 715 a year later.
Although the World Trade Organization last September allowed India 15 months to implement this decision, Washington was unwilling to wait that long. It pressured India to lift the import control sooner; American companies will have market access in key areas such as agriculture, textiles, consumer goods and a host of other products.
It is most unfortunate that announcement of the pact was made in Washington. New Delhi remained silent, fearing criticism and ridicule from political opposition and domestic industry.
When the deal was signed between the two nations Dec. 16, the Indian Parliament was in session, but Prime Minister Atal Bihari Vajpayee’s Government did not take the House into confidence, thus ignoring a vital democratic process.
Obviously, the arrangement is not a happy one for India. It is bound to have serious repercussions on the country’s industry, agriculture, trade and economy. Small-scale factories — of which there are hundreds, employing thousands of people — are already struggling to survive. These will be wiped out. Marginal businessmen and even farmers will be pushed out of business.
It is, therefore, not surprising that industrialists, small and even medium as well as big, have been pleading with left parties for support. D. Raja, general secretary of the Communist Party of India, sympathizes with them, but appears helpless in the face of a strong power arm-twisting a weaker one.
The haste with which New Delhi was forced to yield is what has been most resented here. Former Finance Minister and champion of the free market, P. Chidambaram, cannot understand why India had to remove the restrictions so quickly. Even the European Union and some others have decided to phase out import curbs only by March 2003.
What is this game that has pushed New Delhi into the dark corner? Though an answer to this remains a mystery, it is beyond doubt that no sector has been left untouched. Even sweeping brooms have not been spared. Fans, hair-removing appliances, glue, linen, cars, rice, wheat, vegetables, coffee: The list seems endless.
Some examples here will be illustrative. While the rich cultivator can sell his land and turn to trade, the man with a few holdings will collapse as the attack from an unchained import lobby begins. Little textile weaving and spinning cooperatives will crumble and disappear.
Labor-intensive units in Tamil Nadu (a southern Indian State), for instance, are already in deep gloom worrying how business equations would change once the WTO writ begins to run. The newly-emerging state-of-the-art automobile industry will have to compete with used-car imports. Indian Commerce Minister Murasoli Maran did plead with the WTO appellate authority last October to exempt vehicles from the list, but the answer was no.
What is most alarming is the effect of the new trade policy on employment. Many items in the list to be freed from the import ban are made in the relatively unorganized small-scale sector that is labor rich. When foreign firms move in, it is highly unlikely that the small production houses will have the money or means to take on the giants. Thousands of workers will be on the streets, creating new social tensions.
Larger businesses might also be forced to stop manufacturing at least some of their items in the face of the market being flooded with imported goods bound to be cheaper than those locally made. Some big Indian companies might turn into mere traders from producers; they could buy their stuff elsewhere and market it. Naturally, this will add to the prevailing employment crisis.
However, advocates of the new arrangement aver that capital will flow into India from the developed world and the consumer will have not just a better choice, but a great bargain.
Quite possible, but this is something that Indian industry could have achieved on its own. For decades, mighty powers here neglected the weak so heartlessly that many faded away. Some of the beautifully colored and crafted wooden toys, for example, bowed down before Lego and Barbie, not because indigenous ones were inferior in any way, but they could not stand up against a superior infrastructure, huge campaigns and glib talk.
Far more regrettable has been the avarice of big industries that pegged margins of profit at high levels. Sales outlets went for higher markups and buyers paid tens of times more. Now industry stands threatened, society is likely to face upheaval and people may experience a greater sense of deprivation. This in a land where 400 million citizens are already extremely poor.
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