In a significant policy speech earlier this week — in the backdrop of India staying out of the just-signed Regional Comprehensive Economic Partnership — external affairs minister S Jaish-ankar laid out the government’s outlook towards globalisation. He acknowledged that India had benefited from opening up in the last three decades. But Mr Jaishankar had reservations about the terms of this engagement, and argued that in the absence of a strong industrial base, and lack of adequate attention to domestic reforms and manufacturing, India had also lost out.
It is somewhat paradoxical that a minister in what can be termed a government that leans towards the Right has articulated a position that resembles that of the Left. Ever since India opened up, it was the economists on the Left who warned against its implications on domestic capital and labour.
But Mr Jaishankar is not arguing for a return to autarkic ways. He is, instead, borrowing from market economists to suggest a next generation of reforms. He is guided by the strategic environment — where the West is turning inwards and China’s predatory trading practices have devastated local markets — and the need to strengthen India’s economic defences, both in manufacturing and new digital technologies. This is a balanced approach – but it is tough to execute. India cannot expect to be an export powerhouse if it closes itself to imports. It cannot expect the world to rely on it if it chooses to rely only on itself. And to build domestic strengths, it has to deepen external economic engagement too.