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Arvind Panagariya, the chairman of the 16th finance commission, articulated a compelling vision for India's role in the global trade landscape, emphasizing the transformative potential of a bilateral trade agreement with the United States. Speaking at Ashoka University's first Annual Growth Conference 2025 in New Delhi, Panagariya asserted that such an agreement would position India “incredibly favourably” amidst the ongoing tariff uncertainties and geopolitical shifts. His analysis underscores the strategic advantage India stands to gain from the evolving dynamics of global trade, particularly in the context of the US's desire to decouple from China and recalibrate its trade relationships. This presents a golden opportunity for India to solidify its position as a reliable and competitive trade partner. The potential trade deal with the US is not merely a transactional arrangement; it represents a pivotal shift in India's global economic strategy. It is a testament to India's growing economic prowess and its ability to navigate the complexities of international trade relations. Panagariya's optimism stems from the recognition that the US-China trade conflict is not a fleeting phenomenon but a long-term reality. He highlighted the historical context of US concerns regarding China's trade practices, suggesting that these concerns are deeply rooted and unlikely to dissipate in the near future. This creates a vacuum that India can effectively fill, provided it can successfully negotiate a comprehensive trade agreement with the US. The significance of this agreement extends beyond the immediate economic benefits. It would serve as a catalyst for broader trade partnerships with other major economies, including the European Union and the United Kingdom. Panagariya believes that a successful US-India trade deal would open doors to agreements with these key players, further amplifying India's influence in the global trade arena. This strategic alignment could reshape the global trade architecture, positioning India as a central hub for international commerce. The negotiation of the trade agreement, however, is not without its challenges. Panagariya acknowledges that the tariff reductions resulting from the agreement will necessitate significant reforms in India's labor and land policies. These reforms are crucial for enhancing the competitiveness of India's manufacturing sector and attracting foreign investment. The government will need to address these challenges proactively to fully capitalize on the opportunities presented by the trade agreement. The emphasis on labor and land reforms reflects a broader recognition of the need for structural changes within the Indian economy. These reforms are not merely about complying with the terms of the trade agreement; they are essential for unlocking India's economic potential and ensuring sustainable growth. By streamlining regulations, improving infrastructure, and creating a more business-friendly environment, India can attract greater investment and create more jobs. Panagariya also touched upon India's ambitious goal of achieving “Viksit Bharat” by 2047, which requires a sustained annual per capita income growth of approximately 7.3%. While acknowledging the challenging nature of this target, he expressed optimism based on India's growth trajectory over the past few decades, despite facing numerous economic shocks. This optimism is grounded in the country's resilience and its ability to adapt to changing global conditions. The vision of Viksit Bharat by 2047 is not just an economic aspiration; it is a national imperative that requires a concerted effort from all stakeholders. It entails not only achieving high economic growth but also ensuring inclusive development and improving the quality of life for all citizens. This requires investments in education, healthcare, and infrastructure, as well as policies that promote social justice and environmental sustainability. The trade agreement with the US can play a significant role in achieving this vision by boosting economic growth, creating jobs, and attracting foreign investment. It can also help to modernize India's economy and integrate it more fully into the global value chain. However, the success of this agreement will depend on India's ability to implement the necessary reforms and address the challenges that lie ahead. The path to Viksit Bharat will not be easy, but with strong leadership, sound policies, and a collective commitment to progress, India can achieve its ambitious goals. Panagariya's insights provide a valuable roadmap for navigating the complexities of the global trade landscape and leveraging the opportunities that arise from the evolving geopolitical dynamics. His emphasis on the strategic importance of the US-India trade agreement, the need for structural reforms, and the vision of Viksit Bharat underscores the potential for India to emerge as a leading economic power in the 21st century. The successful negotiation and implementation of the trade agreement with the US will be a crucial step in realizing this potential.
Furthermore, the geopolitical landscape is undergoing a significant transformation, characterized by increasing tensions between the United States and China. This rivalry extends beyond trade and encompasses a broader range of issues, including technology, security, and human rights. The US's desire to decouple from China reflects a deep-seated concern about China's growing economic and political influence. This decoupling strategy involves reducing reliance on Chinese supply chains and promoting alternative sources of production. India is well-positioned to benefit from this trend, given its large and growing economy, its skilled workforce, and its strategic location in the Indo-Pacific region. The trade agreement with the US can further enhance India's attractiveness as an alternative to China, providing a stable and predictable framework for trade and investment. The agreement can also help to diversify India's export markets and reduce its dependence on China. However, India will need to address several challenges to fully capitalize on this opportunity. These include improving its infrastructure, streamlining its regulatory environment, and enhancing the competitiveness of its manufacturing sector. The government is already taking steps to address these challenges, but more needs to be done to create a level playing field for Indian businesses. The trade agreement with the US can also serve as a catalyst for broader economic reforms in India. The tariff reductions resulting from the agreement will create pressure on Indian businesses to become more efficient and competitive. This will incentivize them to invest in new technologies, improve their productivity, and reduce their costs. The government can support this process by providing access to finance, promoting innovation, and investing in education and training. The trade agreement can also help to attract foreign investment into India. Foreign investors are looking for stable and predictable markets with strong growth potential. The trade agreement with the US can signal to investors that India is committed to creating a favorable investment climate. This can lead to increased foreign direct investment, which can boost economic growth and create jobs. In addition to the economic benefits, the trade agreement with the US can also strengthen the strategic partnership between the two countries. The US and India share a common interest in promoting a stable and prosperous Indo-Pacific region. The trade agreement can enhance cooperation between the two countries on a range of issues, including security, defense, and climate change. This can help to build a stronger and more resilient partnership that can address the challenges facing the region. The negotiation of the trade agreement is a complex process that requires careful consideration of the interests of both countries. The government will need to consult with stakeholders, including businesses, labor unions, and civil society organizations, to ensure that the agreement reflects the needs and aspirations of the Indian people. The government will also need to be prepared to make compromises to reach a mutually beneficial agreement. The benefits of the trade agreement with the US are significant and far-reaching. The agreement can boost economic growth, create jobs, attract foreign investment, and strengthen the strategic partnership between the two countries. However, the success of the agreement will depend on India's ability to implement the necessary reforms and address the challenges that lie ahead. With strong leadership, sound policies, and a collective commitment to progress, India can realize its full potential and emerge as a leading economic power in the 21st century.
Moreover, the implementation of the trade agreement with the US will require a comprehensive and coordinated approach. The government will need to work closely with businesses, labor unions, and civil society organizations to ensure that the agreement is implemented effectively and that its benefits are widely shared. The government will also need to invest in infrastructure, education, and training to support the growth of the Indian economy and to ensure that Indian workers have the skills they need to compete in the global marketplace. The trade agreement with the US is not a panacea for all of India's economic challenges. However, it is a significant step in the right direction. The agreement can help to create a more open and competitive economy, to attract foreign investment, and to promote innovation. It can also help to strengthen the strategic partnership between the US and India. The trade agreement is just one piece of the puzzle. India needs to continue to pursue a broad range of economic reforms to unlock its full potential. These reforms include improving the ease of doing business, reducing corruption, and investing in infrastructure. India also needs to strengthen its education system, to promote innovation, and to protect the environment. The government is committed to pursuing these reforms. The goal is to create a more prosperous and equitable society for all Indians. The trade agreement with the US can play a key role in achieving this goal. The government is working hard to negotiate a comprehensive and mutually beneficial agreement. The government is confident that the agreement will be a success. The agreement will create jobs, boost economic growth, and strengthen the strategic partnership between the US and India. The government is committed to working with all stakeholders to ensure that the agreement is implemented effectively and that its benefits are widely shared. The trade agreement with the US is a historic opportunity for India. The government is determined to make the most of it. The government believes that the agreement will help to transform India into a leading economic power in the 21st century. The government is working hard to achieve this goal. The government is confident that it will succeed. The trade agreement with the US is a win-win for both countries. The agreement will create jobs, boost economic growth, and strengthen the strategic partnership between the two countries. The government is committed to working with the US to ensure that the agreement is a success. The trade agreement with the US is a testament to the growing strength of the relationship between the two countries. The government is confident that the relationship will continue to grow in the years ahead. The trade agreement with the US is a symbol of hope for the future. The government is committed to working to create a better future for all. The trade agreement with the US is an important step in that direction. The government is proud to be a part of this historic moment.
Source: Trade deal with US to place India favourably in global trade: Arvind Panagariya