Global interdependence will drive India’s economic prosperity
In the life of a nation, as in the lives of individuals, entering the eighth decade is a momentous milestone. For India, the last seven decades have been enormously transformational. While India’s current record as one of the fastest growing economies is top of mind today, it’s worth remembering that soon after Independence, the nation had a promising start. It was a forerunner in development planning and achieved an average industrial growth of more than 8% per annum between 1954-55 and 1964-65. Since Independence, the Gross Domestic Product (GDP) has expanded more than forty-fold to exceed $2 trillion today.
A key lesson to be learnt from the Indian economy’s journey from Independence is that the country has gained from increasing its interdependence. India has been a beneficiary of globalisation and it’s imperative that we continue the move towards greater openness. India’s current share in global trade (1.94%) is much lower than where it should be. There are many ways to deepen India’s economic and commercial connections. For instance, a focus on advanced economies such as the US, UK, Japan and Israel can unleash immense economic benefits. India-Japan collaboration for developing Northeastern corridors can provide better connectivity to East Asia. Similarly, strengthening India’s commercial relations with the US holds important implications for enhancing our defence manufacturing and Make in India.
Going beyond bilateral collaboration, India could benefit from multilateral synergies. A three-way collaboration of India-US-Israel holds economic promise. Combining US and Israel’s expertise in advanced technologies with India’s large talent base would enable businesses in the three countries to gain competitively. Likewise, promoting collaboration at the level of the respective country’s states, between large economies like the U.S. and India, will open new economic opportunities. While India could benefit from technology transfer and employment generation facilitated by foreign engagements, overseas firms will gain from having market access to India’s vast, high growth market. Well-designed collaborative efforts would go a long way in helping the country meet its aspiration to become a hub for high-tech manufacturing.
To further its interdependence, India has pursued free trade agreements (FTAs). For instance the FTA with Chile has resulted in a surge in the presence of Indian automobiles on Chilean highways. Even programmes such as Skill India, Stand-up India and Digital India will benefit from global interdependence.
We live in an age of mutual economic interdependence, more than ever before. Just as we focus internally on the ease of doing business, ease of trade facilitation and associated logistics also warrant major emphasis to facilitate greater participation in global value chains. Hence, greater regional and global integration must continue to be priorities.
India’s economic prosperity will be driven by its global interdependence, in increasing trade and investments into and from India, helping drive GDP growth and prosperity for all Indians. We have an opportunity to build on the progress of the past 70 years to further advance the benefits of globalisation for India.
Arun M Kumar, is Chairman & CEO, KPMG India
The views expressed are personal