We Need To Dispel Narrative That India Is Not Easy Place To Do Business: Navdeep Suri
Navdeep Suri, India’s former envoy to Australia as well as the UAE and Egypt, in conversation with BW Businessworld, talks about the India-UAE Comprehensive Economic Partnership Agreement (CEPA) and the Indo-Australia Economic Cooperation and Trade Agreement (AusInd ECTA) as well as India’s growing role in the world. Excerpts:
India and the UAE already share robust trade ties, with the latter serving as India’s third-largest trading partner and the second-largest export destination. With the CEPA firmly in place, what do you think India should do to further consolidate its position in the Middle East-North Africa (MENA) region?
The UAE serves as an important gateway to the MENA region and the CEPA is going to reinforce that. Our current exports to the UAE stand at about USD 32 billion and the ambition is to double it. The UAE is not a large enough market to absorb the exports, so a lot is trans- shipped to East Africa, to the Gulf, Central Asia, Iran and Pakistan. This is facilitated through the Jebel Ali port in Dubai, a free trade zone backed with exceptional warehousing and quick transit facilities. There is also a plan to set up an India mart in Dubai, to create a large retail space where Indian MSMEs can showcase their electrical products, sanitary goods, and buyers from Ethiopia or Kenya can purchase goods straight from there, obviating the need to visit India for a deal to be struck.
In light of global efforts towards net zero, how does climate change feature in India and the UAE’s individual ambitions and trade negotiations?
India is going to be crucial to achieving net zero globally. If India were to become as profligate in energy consumption as the West is, then the planet does not stand a chance.
Interestingly, the UAE is one of the world’s largest producers of oil and yet was an early convert to the use of renewable energy. They have become the first country in the Middle East to have a nuclear power plant. Masdar near Abu Dhabi has ambitions to be an entirely net zero community, fuelled completely by renewable energy. India and the UAE also have plans to collaborate closely in making Green Hydrogen a truly viable fuel for the future.
With several nascent and growing industries, what should India do to protect its vulnerable sectors?
In the agreement with the UAE, India has emphasised on the rules of origin (RoO) clause and set conditions of up to 40 per cent value addition. With Australia, dairy and most farm products have been left out of the agreement to protect vulnerable Indian sectors.
The Indian negotiators have done a good job in focusing on the complementarities in the economies and opening prospects for India’s products. In the UAE, the agreement states that any product which has the USFDA or other global approval does not need inspection by local authorities. This used to cause a delay of not just months but years. Regarding Australia, Indian students will have access to post-study work visas which will enable them to work there for longer.
There is a general expectation that larger industrial establishments and investors will seek to benefit from the trade pacts. But how will the smaller manufacturers and MSMEs gain?
Several products listed for export to the UAE are manufactured by MSMEs. These include leather products, gems and jewellery, textiles, and apparel. These are labour-intensive sectors which employ millions of Indians. With the lowering of tariffs, Indian products will be able to compete with similar products from China.
India has been perceptive in picking countries such as the UAE and Australia, which are not large manufacturing hubs, so it would not have to compete in most products. These FTAs will also fast-track India’s discussions with the Gulf Cooperation Council (GCC) and become a template to negotiate agreements with the GCC.
With India’s growing role in the world, potentially as the next economic superpower, how does India plan to navigate the situation in Europe and ensure that its trade ties remain unaffected?
Currently, India is a long way from being an economic superpower. It needs to reach at least USD 5 trillion and an annual growth rate of 9-10 per cent before we can make such a claim.
There are multiple dimensions to the situation in Europe. Firstly, the way the Russians are using force in congested urban areas and the number of civilian casualties should be condemned. However, the Americans have weaponised financial institutions like SWIFT, which is also reprehensible. In such a situation, the only major course open to India is to stay neutral, which we have done by abstaining from voting on such a resolution for the twelfth time.
In economic terms, I think we are seeing the impact of high energy prices on our own wallets, on inflation and on the rising import bill. However, India has been cushioned by its forex reserve, domestic growth, and GST collection.
As a citizen of the country and as someone who has been an active participant in previous negotiations, what is your opinion on the India-Australia trade pact?
There are winds of change in Udyog Bhawan. I was actively engaged in the FTA discussions since 2011 and during my term in Australia, the trade minister, Andrew Robb, would come to Delhi every three months and return with inconclusive discussions. We have realised two things from a strategic national perspective. One, we need to actively show that India is open for investment and trade and secondly, we need to dispel the narrative that India is not an easy place to conduct business.
With this change, both Australia and the UAE have recently emerged as strong friends of India and apart from our economic ties, the FTAs are well-timed, coinciding with our larger strategic priorities, especially in the Indo-Pacific region.
