Prime Minister and US President Joe Biden had a bilateral meeting and some further trade disputes were resolved between the two countries. What is the next phase of our trade relations?
The US and India are friends, natural and strategic partners. They are our largest trading partners. Never before in the history of India have we had relations with the US as good as they are today. This is the best time. They trust India and want to expand investments and trade with India. We believe that we are working together for the good of the people of both countries and for the good of the world. The meeting between Prime Minister and President Biden between the historic state visit to the US added new dimensions, including closing the last dispute that we had lost. It is due to the mature leadership and foresight of the two leaders that they have resolved the last dispute and demonstrated to the world that the US and India are moving closer together, sending a message to companies on both sides to increase trade and expand investments and clear a roadmap of reconciliation, collaboration and cooperation, which will create enormous opportunities – aviation, AI, Big Tech and space startups.
The India-Middle East-Europe economic corridor was also developed. The idea is to connect India to Southeast Asia and then to Europe via West Asia. We have a number of trade agreements, such as those with Asean and the UAE, and others, such as those with the Gulf Cooperation Council, the United Kingdom and the European Union, are in the works. Will they act as building blocks? What investments will we see?
The Prime Minister’s vision to make India a developed country has several dimensions, one of which is very important is trade and investment. No country has developed without expanding its international boundaries. While we had free trade agreements with the Eastern Bloc, in West Asia and West we had virtually no agreements. The government has focused on expanding friendship and partnership with the developed world so that we can become part of their global value chains. The proposed corridor is a huge factor strengthening the connectivity of roads, railways, pipelines, digital cables, submarine cables and utilities. Each country will submit proposals and we will work together as a team. India will use its strength in areas such as railways and renewable energy.
Trade and FDI figures are lower than last year. What is the government doing to correct this?
Some of it is due to market dynamics. Petroleum exports have been hit by lower prices and a drop in discretionary spending has affected sectors such as gemstones and jewelery and clothing. These segments are affected by the slowdown. Global growth has slowed, with WTO estimates pointing to slowing growth. The feedback from companies is that demand seems to be picking up and they are quite confident that the year will end on a good note. Due to high interest rates in the West, there is some delay, which has consequences for investments. We will have to wait for interest rates to correct before we can look at major investment decisions.
On the inflation side, steps have been taken in wheat and rice. Will we see measures regarding sugar? What is the overall estimate of food inflation given that the monsoons are likely to be below normal?
We have a very robust mechanism to monitor prices across the country and decisions are made based on the inputs we receive from the Ministry of Markets and Agriculture. There is no forward guidance. Over the last nine years, especially the last two when the world was at historic highs, we have been very proactive in controlling prices in India. My own feedback is that there is a serious threat of El Nino, but proactive measures will help us mitigate that risk and we do not see a significant increase in prices. Many steps were preventive.