Mixed signals

Pandemic imperatives require diversification of supplies but protectionism is no answer

At a time that India is looking to impress upon the world that it is strongly positioned as well as willing and able to become a more reliable supply chain partner for them than China has been proven in recent times, External Affairs Minister S. Jaishankar’s remarks on Tuesday about globalisation are worth taking note of. The pandemic experience creates a case for ‘shorter’ supply chains with more ‘national’ capacities, he said, before chiding globalisation ‘Gurus’ for advocating open markets without acknowledging geopolitical motivations. That he cited the example of India’s health-care supply chain vulnerabilities being exposed after the onset of COVID-19 makes it clear his broader message was aimed at China on whom India relied too much for critical pharma and health-care imports, and continues to run up large trade deficits with. Tapping the receding global sentiment for China, and the dangers about depending on limited, even if hugely efficient, supply chains, is a sensible ploy gaining resonance. Earlier this month, Australia’s Special Envoy to India Tony Abbott accused China of ‘weaponising trade’, losing its credibility and blocking trade flows. That Mr. Abbott, a former Australian Prime Minister, who had himself signed a free trade pact with China, is now pushing hard for a trade deal with India as an ‘obvious trustworthy substitute’ for global supply chains, is an admirable endorsement of official tact.

However, Mr. Jaishankar also went on to term the idea that ‘other people can ... operate in your economy on terms which are advantageous to them’ as ‘ridiculous’ and argued that there was no need to be defensive about ‘protectionism’. Perhaps, he was addressing the reiterated discontent about some of India’s broader market access reluctance, based on recent supply chain shocks in sectors ranging from semiconductors to commodities. But this broad-brush messaging against globalisation is troublesome, particularly when other Cabinet members are taking pains to convey to investors and potential FTA partners that the Atmanirbhar Bharat campaign is not a protectionist platform. Such mixed signalling may also unnerve negotiating counterparts and stakeholders for similar deals with the UAE, Canada, the EU and those involved in the revived India-U.S. Trade dialogue. There is no denying that the world is yet to get a fair global trade order through the WTO, or the immediate pandemic imperatives require diversification of supplies and scaling up of domestic capacities to build some resilience. But protectionism is not the answer as India itself will argue with countries where it seeks market access; and globalisation per se cannot be pooh-poohed even as India continues to gain from it through rising exports. Just because of the pandemic, the world will not become less interdependent as it is simply not possible for everyone to make everything. As former Chinese Premier Wen Jiabao said, citing China and Singapore’s examples: ‘... a nation that shuts its door to the world is bound to fall behind.’ India would be well-served if the focus is on grabbing the opportunities the world is throwing up, while holding back lamentations for private conversations.