29 NOV,2020 | MEDC
With the world economy in turmoil, and by opting out of the RCEP, India is not likely to become a key player in the GVC anytime soon. This will affect domestic investment, as MNCs want to invest in globally competitive countries. However, this does not necessarily mean that our policymakers have erred. The fear that India will be flooded with Chinese goods if it joins the RCEP is justified. We need to get our domestic infrastructure in order, before opening up our economy. At the same time, tariff reduction ought to be high on the policy agenda. Protectionism tends to make the economy uncompetitive, and it is difficult to grow at a high rate on a sustainable basis without rising exports. It is important to be vocal about local, but Covid has also taught us that the world is a much smaller place than we think. Sooner or later, India will need to play a key role in the GVC, and the preparatory work for that stage should begin at the earliest.
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