Trade protectionism

  • IASbaba
  • November 20, 2020
  • 0
UPSC Articles
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Topic: General Studies 2,3:

  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation
  • Indian economy and mobilization of resources

Trade protectionism

Context: Statements made by Minister of External Affairs hints at trade protectionism with disapproval of free trade and globalization.

Tariffs have been increased, FTAs are being demonised, and ‘vocal for local’, which strikes at the heart of international trade and globalisation, is the new mantra.


  • Refusing to sign RCEP India is now truly at the margins of the regional and global economy.
  • Trade multilateralism at the World Trade Organization (WTO) remaining sluggish, FTAs are the gateways for international trade. 
  • By not being part of any major FTA, India cannot be part of the global value chains.
  • India’s competitors such as the East Asian nations, as part of RCEP, are in a far superior position to be part of global value chains and attract foreign investment.
  • Blaming FTAs for deindustrialization of India means the same old issue with Indian industry — which is the lack of competitiveness and absence of structural reforms.

India is not that open as perceived

  • India’s applied most favoured nation import tariffs are 13.8%, which is the highest for any major economy.
  • According to the United Nations Conference on Trade and Development, on the import restrictiveness index, India figures in the ‘very restrictive’ category.
  • India has initiated anti-dumping measures 972 times (the highest in the world), zealously endeavouring to protect domestic industry.

Globalization and India

  • India has been one of the major beneficiaries of economic globalisation — a fact attested by IMF.
  • Post-1991, the Indian economy grew at a faster pace, ushering in an era of economic prosperity. 
  • According to the economist and professor, Arvind Panagariya, poverty in rural and urban India, which stood at close to 40% in 2004-05, almost halved to about 20% by 2011-12. 
  • This was due to India clocking an average economic growth rate of almost 8% with international trade being a major engine of progress.


  • Expecting to attract Foreign Investments and adopting a policy of trade protectionism is contradictory in nature.

Connecting the dots:

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