The democratic state of India has been a member of the World
Trade Organization since January 1, 1995, a development that occurred four
years after the presidential assassination in 1991 that spurred economic reform
and an opening of the Indian markets. The country now understands that more
free and open trade can contribute to the necessary growth of the economy by
“foster[ing] investments, increase[ing] the market…and enhanc[ing] global
participation.” Evidence of this Wolfian free market system can be seen within
India’s participation at an April 16, 2012 meeting with Korea and China, among
others. The meeting saw efforts to open markets for exports from the world’s
poorest countries, where 12% of the world’s population lives on only 1% of
global trade. The meeting’s participants aim to achieve this goal by
eliminating non-tariff barriers such as duties and quotas by 85% before the
year 2013.
The
evolving automobile industry within India represents one facet of its recent
efforts towards stronger global integration. The late 20th-century
Indian automobile industry included the requirement of Public Notice No. 60, a
law known as the “indigenization” condition that required a percentage of every
car made within the nation to contain parts manufactured on Indian soil. The
protectionist measure was revoked starting in April 2001, and recent studies
indicate that “India is now turning into a major international hub for
technical textiles trading and manufacturing. Multinational companies have
started making their presence in India known in various technical textiles
sectors such as automobiles” (export.gov/india).
Despite
India’s efforts to increase economic growth through open trade, the
agricultural sector represents the last vestiges of their formerly protectionist
model. The government continues to support farmers through subsidies and
distort prices through high import tariffs, issues which prevent the
productivity increasingly prevalent within the technological innovation in the
nation. At the heart of the agricultural issue within the nation is poor
infrastructure—the government has no means to deal with high unemployment, and
the result has been an increasing trend towards the low-skilled agricultural
sector of the economy. The agriculture problem for India remains a large
concern as well, because “agriculture’s share in India’s overall GDP is
gradually declining with the current share at less than 19% while nearly
two-thirds of the population depends on agriculture for their livelihood”
(export.gov/india). High unemployment because of poor national infrastructure,
in other words, prevents the growing economy from developing within the
dominant agricultural sector.
India’s
efforts to integrate with world markets depend on the creation of effective
infrastructure that the nation hopes will increase once inflation decreases and
drive interest rates down—the effect will be manufacturers increasingly willing
to both export and build Indian industry. As one Economist article notes, some industries have succeeded in this
respect: “India’s carmakers, by and large, have done well…[but] if services are
to keep expanding, the country needs huge quantities of skilled labour that
will not be easy to come by” (The Economist).
Crippled by high unemployment and a lack of productivity, India remains
unwilling to open borders within its agriculture sector despite the success of
a recently integrated automobile industry.
Works Consulted
“Background Note: India.” Background Notes/Country Fact Sheets. U.S. Department of State: Diplomacy in Action. 17 April 2012.
Web. 27 Nov. 2012.
U.S. Department of State-supplied
basic facts on Indian demographics, including information on presidential
assassination and the beginnings of global trade and investment.
“Day 1: Public Forum begins seeking answers to global trade
challenges.” WTO: 2011 News Items.
World Trade Organization, 19 Sept. 2011. Web. 27 Nov. 2012.
The WTO’s report on India’s actions
to end Public Notice No. 60 and the indigenization condition that encouraged
privatization within the automobile industry. The article describes the
country’s efforts to greatly reduce import restrictions.
“Import Requirements and Documentation.” Doing Business in India: 2010 Country Commercial
Guide for U.S. Companies. US Commercial Service: United States ofAmerica Department of Commerce, 29
April 2011. Web. 27 Nov. 2012.
The article describes the state of
the automobile industry within India, focusing on its successful growth and the
hope for a globally integrated future in the nation given the continuation of
growth in the manufacturing sector of the economy.
“India: Measures Affecting the Automotive Industry.” World Trade. World Trade Organization Appellate Body, 19 Mar. 2002. Web.
27 Nov. 2012.
Information on the April 16, 2012
meeting between India and China, among others, that outlined plans to
relinquish nontariff barriers by 2013.
“Leading Sectors for U.S. Export and Investment.” Doing Business in India: 2010 Country
Commercial
Guide for U.S. Companies. US Commercial Service: United States of America Department of Commerce, 29
April 2011. Web. 27 Nov. 2012.
Description within the U.S.
Department of Commerce of India’s struggling agricultural sector, including
price distortion, declining public investment, and high import tariffs. The
article focuses on the effect of the agriculture industry on the Indian economy
as a whole.
“The Economy: Express or stopping?” economist.com The Economist, 29 Sept. 2012. Web. 29 Nov. 2012.
The
Economist provides information on the problems within the Indian economy
that stem from poor agricultural infrastructure, high unemployment, and the
high cost of labor. The article mentions the success of a few open markets, but
suggests that agriculture’s severe issues will handicap the economic future of
the nation as a whole.
