Noting that India has been “slower” than other countries in entering free trade agreements, NITI Aayog Vice Chairman Arvind Panagariya today said India will need to capture some of the world markets if it has to sustain an eight to 10 per cent growth rate over the next 20-25 years.
“On the Free Trade areas, India has been certainly slower than other countries,” Panagariya said here at a discussion organised by the Asia Society Policy Institute on the two years of the Indian government responding to whether trade-led growth is a priority for the government.
He said the broader question is whether “outward orientation” is part of the government’s strategy of development, adding that his push is in that direction.
“I just don’t see that if India is to try to sustain a growth rate of 8-10 per cent over a period of 20-25 years, it can be done without actually capturing some of the world markets,” he said.
He added that apart from liberalisation, India would also need to focus on “internal reforms” like trade facilitation, speed at which goods can move in and out of the country and the various clearances required.
He noted that India’s internal goods market is less than a USD 1 trillion while in the world market merchandise exports is USD 18 trillion.
He said in China, wages have been rising over 10 per cent a year for more than a decade and currently they are 2-3 times the wages in India on an average.
“Wages are likely to rise much faster than they will rise in India. Lot of labour intensive firms are moving out of China and India ought to be the natural destination for them,” he added.
When asked if India could look at joining the Trans- Pacific Partnership, Panagariya said the TPP is not on India’s horizon “at this stage”.