We have entered era of de-globalisation: CEA V Anantha Nageswaran

 
Strap:
 
Surabhi
 
Even as India’s export growth has gained momentum in recent months, Chief Economic Adviser V Anantha Nageswaran, on Thursday, cautioned that there is growing protectionism and “de-globalisation” risks and there should not be too much expectation that global growth and global exports would lift up domestic exports.
 
He highlighted that instead it is more important to focus on human capital investment for the Indian corporate sector to take research and development seriously, look at quality issues seriously in segments such as pharma exports, and also look at deregulation of policies. Logistics performance is one aspect of policy which can and should continue to strive, he underlined.
 
“If you look at the seven months of data for the current financial year, excluding oil and gems and jewellery, then merchandise exports have grown close to double digits—9% growth… I think there are some improvements happening, but we should be under no illusions. In other words, the rising tide will not lift all the boats,” he said at Second National Conference on India’s Industrial Transformation, organised by the Institute for Studies in Industrial Development (ISID).
 
He noted that India’s export growth has a “high beta play on global export growth”, and so, as global volumes rise, India also benefits. “It’s not as if we are very good at grabbing market share in terms of higher quality, lower cost or better value for money. When there is a general tide that lifts all boats, India’s export boat also gets lifted,” he said, adding that this was the reason why India was able to break out of the $250 billion to $300 billion of merchandise exports into the range of between $450 billion and $500 billion.
 
He, however, noted that we now have to compete in a different environment, because the first decade of the new millennium was also a decade of the heydays of globalisation. But a new era will start from January 20, 2025 when Donald Trump will take over as the next President of the United States.
 
“...we have a new administration in the United States and its policies, regardless of whether their policies become more intensified or not, we have already entered the era of de-globalisation” he said, adding that in recent weeks the situation in Ukraine has taken a different dimension as well, with concerns about unintended or intended escalation.  
 
“There is much talk of geo-economic fragmentation, where both trade and investment flows happen within blocks of countries which are close to each other, rather than across blocks,” he said, adding trade restrictions and trade protectionism have become much larger even after the first term of President Trump, between 2016 and 2020 so and it has become more intensified.
 
“We need to be aware that this reliance on global GDP growth and global export growth driving our export growth—that’s not going to happen,” the CEA underlined.
 
As per provisional data, India’s merchandise exports grew by 17.25% in October to $39.2 billion, from $33.43 billion a year ago. Imports increased by 3.9% to $66.34 billion in October 2024 from $63.86 billion in the year-ago period. The trade deficit, or the gap between imports and exports, was $27.14 billion during the month under review.
 
Meanwhile, addressing the conference, Nagesh Kumar, Director, ISID also highlighted that industrial policy is once again on the rise in the global economy and is being revived by the US, which has been one of the biggest champions of free markets.
 
“So there is a bipartisan consensus in Washington on the pursuit of industrial policy to revive the manufacturing sector, and with the news that came in a week ago, President-elect Trump becoming a new president, or next President of United States, this trend is going together further momentum and industry of the manufacturing sectors,” he said, adding industrial policy and the manufacturing sector is also very critical for India, given the large workforce.
 
“Criticality can be nowhere more critical or important than in India, a country of 140 million people, or very youthful—65% of our people are in the workforce, and that is continuing to grow for next two decades,” he underlined.