India Should Aggressively Pursue FTA With EU: Panagariya
“India has come out of much bigger crises and the economy currently is robust": Panagariya
NEW DELHI: Sixteenth finance commission chairman Arvind Panagariya on Friday said that India should ‘aggressively pursue’ a free trade agreement with the European Union, besides moving ahead with land and labour market reforms and reducing regulations to accelerate its growth trajectory. He also hit back at the "dead economy" jibe made by the US President Donald Trump, saying that "maybe dead bodies do move".
“India faces a pivotal moment in the current geopolitical order of higher tariffs on exports and the country should now push the pedal on its reform agenda. At this pivotal moment, we should aggressively pursue the free trade agreement with the European Union. That is very, very important. As one market seems to be kind of closing, we need to open wider another market,” Panagariya said while speaking at the Business Today India@100 event here.
On August 6, the US announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty, taking the total duty to 50 per cent effective August 27. The White House said the measure responds to India's continued purchase of Russian oil.
Asked on the ‘dead economy’ jibe, Panagariya said, “You don't grow at 7 per cent plus (if the economy is dead), and in dollar terms we are actually growing at more than 7 per cent. I don't know what the definition (of dead economy) is. Maybe dead bodies do move.”
Last week, US President Donald Trump had remarked that India is a "dead economy" as he imposed a steep 25 per cent tariff plus a penalty for Russian imports. To a question on what more reforms can be undertaken, Panagariya said that at the central government level, there could be more trade agreements and also a focus on Asian markets for exports, besides, reassessing our stance with China.
On India’s reforms amid the current dismantling of global trade order, Panagariya also said, “It is a pivotal moment for us to be looking for how India should be modifying its growth path. Particularly, in the present context in some ways this is practically like the 1991 moment that there is a crisis that has been brought about by the massive tariffs that the US has imposed. It is a good time to look back and take stock and think of what we could do and a number of things to be done.”
“India has come out of much bigger crises and the economy currently is robust. In times of trade crisis, supply chains shift depending on where the best deal is available. If we face higher tariffs in the US and lower tariffs in the European Union, and Vietnam faces lower tariffs in the US, then our exports can shift out of the US into the EU... In markets, the profit motive is strong and entrepreneurs are so smart, that they readjust the supply chains very rapidly,” Panagariya said.