PM and US president Joe Biden had a bilateral meeting and some more trade disputes between the two countries were resolved. What is the next stage of our trade relations?
The US and India are friends, natural and strategic partners. They are our largest trading partners. Never before in the history of India have we had relations with the US which are as good as today. This is the best time. They trust India and want to expand investment and trade with India. We believe, together we are working for the good of people of both countries and for the good for the world. The meeting between PM and president Biden coming between the historic state visit to the US added new dimensions, including closing the last dispute, which we had lost. It is the mature leadership and the foresightedness of the two leaders that they resolved the last dispute and demonstrated to the world that the US and India are coming closer, gave a message to businesses on both sides to expand trade and investment and clearly set out a roadmap of conciliation, collaboration, and cooperation, which will create huge opportunities – startups to aviation, AI, Big Tech and space.
The India-Middle East-Europe Economic Corridor was also worked out. The idea is to link India with Southeast Asia and then to Europe, via West Asia. We have some trade agreements, such as Asean and UAE, and others such as those with the Gulf Cooperation Council, the UK and the European Union are in the works. Will they act as the building blocks? What kind of investments will we see?
The PM’s vision to make India a developed country has several dimensions and trade and investment is one very important one. No country has become developed without expanding its international frontiers. While we had FTAs with the eastern bloc, in West Asia and West we had virtually no agreements. The government has focused on expanding friendship and partnership with the developed world so that we can become part of their global value chains. The proposed corridor is a huge enabler by strengthening connectivity from roads, rail, pipelines, digital, undersea cables and utilities. Each country will put up proposals and we will work as a team. India will use its strength in areas such as railways, renewable energy.
The trade and FDI numbers have been lower than last year. What is the government doing to correct this?
Some of it is due to market dynamics. Petroleum exports have been affected by lower prices and a fall in discretionary spend has impacted sectors like gems and jewellery and clothing and apparel. These segments are affected due to slowdown. World growth has slowed down, WTO estimates point to slowing growth. The feedback from businesses is that demand seems to be picking up and they are fairly confident that the year will end well. Because of high interest rates in the West, there is a little slowdown, which has affected investments. We will have to wait for interest rates to correct before we can look at large-ticket investment decisions.
On the inflation sides, there have been steps on wheat and rice. Do we see some measures on sugar? What is the overall estimate on food inflation given that monsoons are likely to be below normal?
We have a very robust mechanism for monitoring prices across the country and decisions are taken based on the input that we receive from the market and agriculture ministry. There is no forward guidance. In the last nine years, especially in the last two when the world saw historic highs, we have been very proactive to keep prices under check in India. My own feedback is that there is a serious threat of El Nino, but proactive measures will help us mitigate that risk and we don’t see any significant price rise. Many steps were pre-emptive.