India's Shift from Protectionism to Reevaluation of Trade Barriers
The Indian government, under Prime Minister Narendra Modi, introduced protectionist policies by raising tariff rates and implementing Quality Control Orders (QCOs) to regulate imports. These regulations, aimed at ensuring imported goods met domestic standards, were initially introduced due to a surge of imports from China.
Impact of Quality Control Orders (QCOs)
- Over 800 new rules were introduced within a year, with plans to increase to 2,500.
- Arbitrary definitions and standards applied to products, causing confusion and increased compliance costs, especially for smaller companies.
- Trade partners like the US and EU found the regulations exhausting and a hindrance to agreements with New Delhi.
- Made the Indian market appear riskier for multinational companies due to unexpected policy shifts.
Reevaluation and Rollback of Protectionist Measures
A committee led by Rajiv Gauba recognized the adverse effects of these regulations, prompting a rollback of some QCOs:
- The steel ministry withdrew more than one-third of its 151 QCOs.
- The focus has been on intermediate inputs like minerals and polymers, which affect small producers in sectors such as textiles.
Need for Further Reforms
- Rollbacks should extend to consumer goods, ensuring affordability for Indian citizens.
- Transparency and public consultation are necessary to make regulatory practices fair and predictable.
- Consideration of alternative measures, such as exempting goods meeting stringent EU or Japan standards from QCOs.
Conclusion: The recent rollback of some trade barriers is a welcome change, but continued vigilance and reforms are necessary to ensure a balanced approach that supports both domestic producers and consumers.
