Modi Government Not Committed to International Integration - Global Trade Magazine
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  June 6th, 2016 | Written by

Modi Government Not Committed to International Integration

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  • The Modi government has made progress on more than half of the 30 structural reforms it took on two years ago.
  • Modi has opened the Indian economy to private investment and liberalized foreign investment rules.
  • CSIS report indicated a notable lack of progress in India on the trade liberalization front.

With Indian Prime Minister Narendra Modi set to be hosted at the White House tomorrow by President Obama, a Washington think tank has assessed Modi’s economic performance in his first two years in office.

While the prime minister has made progress in several areas, notably opening more sectors of the Indian economy to private investment, trade policy remains a sticking point in its relations with the United States.

According to the report from the Center for Strategic and International Studies (CSIS), the Modi government has made substantial progress on more than half of the 30 structural reforms it took on upon taking office, completing action on seven and making “measurable progress” on another 13.

Many of the successes involve opening up sectors of the Indian economy to private investment, including coal mining, oil and gas, railways, and defense.

The Modi government has also liberalized foreign investment rules in more than 30 sectors and has provided clarity on crossborder tax policies.

But the CSIS report indicated a notable lack of progress on the trade liberalization front. The Modi government decided to delay affirmation of the World Trade Organization’s Trade Facilitation Agreement, a move which, according to the report “reinforced the perception that India remains the United States’ chief opponent on global trade issues.”

India’s pending bilateral trade deals, including the long-negotiated trade agreement with the European Union, appear to be stuck, according to the report. “India is not a party to the major regional or sectoral trade agreements currently under negotiation except the Regional Comprehensive Economic Partnership (RCEP),” the report noted, “and RCEP members are increasingly raising concerns about India’s positions in these talks.”

The Modi administration has not reformed any policies related to patents and compulsory local manufacturing.

The CSIS report found a clear pattern in Modi’s economic policies in his first two years in office and expects more of the same for the next three years: “Structural reforms when possible, little progress on trade integration, and regular relaxation of market access restrictions for foreign investment.”