India: Trade Talks on Agriculture, Automobiles, and Finance

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 20^th-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 The protectionist measure was revoked starting in April 2001, and recent studies indicate that “India is now turning into a major international hub for technical textiles trading and manufacturing.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.