growth, trade, lobby group, business


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Protectionism is once again in vogue and it seems India won’t be missing on this trend. India’s leading businesspeople have called for protectionist policies to compete against the depth of foreign pockets despite a significant improvement in the country’s business-friendly nature.

The heads of Indian Uber and Amazon defended their companies’ ‘Indianness’ after new lobby group Indiatech called for protectionist policies to foster organic growth within borders. However, the calls for protectionism, not dissimilar to those echoed in the US, come at a time when contrary trends appear elsewhere. The World Business Group’s 2018 report has India ranked as one of the top 10 climbers, having jumped 30 places since last year. One of the areas of improvement was in “trading across borders”, including other measures relating to paying taxes, organising contracts and getting access to credit. Access to electricity and registering property are, according to the report, two areas that are yet to be improved on.

Improved ability to do business is good news for India’s startup scene. However, a protectionist approach could limit inflow of capital from countries like the US, which could harm a startup’s short-term prospects, and perhaps inhibit the country’s business-friendly rankings.

In addition to the report, the new lobby group has been accused of hypocrisy, given that its backers include US-based Matrix Partners and Japan’s SoftBank. India’s IT industry body NASSCOM, told Quartz it welcomed lobby groups to ensure a “level-playing-field, access to capital, infrastructure, technology, mentorship.” But added, “We do not believe in trade barriers like China has set up. Competition has to happen.”

SoftBank’s involvement is particularly inconsistent, while they are major investors in India’s ride-hailing app Ola they are also heavy financiers of US-based ride-hailing app Uber. SoftBank told Quartz, “Our intent is to work with the government to support the development of the rapidly evolving internet ecosystem in the country and we hope the organisation would facilitate this.”

The topic of India’s growth and investment has been fervent of late, with the US and India having been in conversation over the preceding months. Both Trump and Modi have economic mandates from their respective electorates; it’s “America First” up against “Make in India”. Meanwhile the Trump administration has continued to attempt to rebalance the $29.6 billion US trade deficit with India by requesting a more open-market approach.

US requests for open trade with India come with their own inconsistencies, Trump having been known to take a protectionist stance to US trade. But the US president is under pressure from the Alliance for Fair Trade with India (AFTI), who have expressed concerns at the efficacy of India’s IP policies and are looking for a fairer US-India relationship with regards to price controls, forced localisation, technical barriers to trade and barriers relating to intellectual property.

US-India talks, one would imagine, will continue. In the meantime, India’s improvement as a region to do business in should help to fuel growth.


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