Dec 30, 1999|
Quantitative restrictions on imports to go by Mach 2001
According to newspaper reports, the Indian government has decided to bring forward the date for removing quantitative restrictions on the import of over 700 items to March 2001. The move follows the filing of a dispute by the United States at the World Trade Organisation (WTO) against the earlier proposed date - March 2003.
The earlier proposed date for removing quantitative restrictions had been accepted by all other trading partners including the European Community (EC).
India's move is aimed at improving trading and political ties with the USA. However, the concern stems from the fact that domestic manufacturers now have a shorter time frame to gear themselves up for international competition. The move will have wide implications for the country and deserves a closer look.
The influx of imports will help improve the standard of living in the country as consumers get access to better and more competitively priced products. Moreover, it will force domestic manufacturers to improve processes and the quality of their products in order to remain competitive. This will have a wider implication for the economy as the productivity levels and, in general, product quality improve. Most importantly, with this gesture, competing countries will also open their markets to Indian products thus boosting foreign trade. Free trade, as reasoned by many economists, will be a step forward in the quest for creating a more vibrant economy.
The manufacturers that will have to bear the brunt of these measures too have ground to oppose this move. First, it was government regulation that restricted them from growing into large efficiently run organisations by imposing measures like licensing and curbs on imports of capital goods. Second, by pursuing a policy of import substitution rather than export promotion Indian manufacturers were isolated from the international markets. This has led to a lack of experience and infrastructure for operating in international markets. By this reasoning, they are justified in asking for a longer time frame for the removal of import restrictions.
The need for foreign trade is felt in most quarters. It is indeed desirable for India. The debate only relates to the timeframe for the removal of import restrictions. The government must ensure that a level playing field is in place once restrictions on foreign competition are eased.
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