New Delhi: Cautioning Indian industry on the changing global trade scenario, government on Thursday asked it to enhance product competitiveness in the international market without seeking "subsidies" and "doles".
"It is a challenge for us to become competitive in the sense of global competitiveness. We have to acknowledge that we have to become competitive not through the route of subsidies and not through the route of doles," Commerce Secretary Rajeev Kher said here.
Addressing Ficci members on the new Foreign Trade Policy, which was unveiled yesterday, he said that the global trading architecture is completely changing and within 2-3 years, the Indian industry will see a paradigmatic shift in the global trade.
"India has so far run on its competitive advantage of its products. (But) in the last few years, this competitive advantage has suffered and we have not yet began reviving it or improving it," Kher said.
Enhancing competitiveness in the global market means increasing the quality, standards and in terms of prices.
He said that implementation of Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP) will pose challenges to Indian industry as India is not a party to these pacts.
Kher asked that if five major markets - the US, Mexico, Canada, Japan and Malaysia - get into a preferential trading arrangement for each other then "who are you (India)"?
"We have to tighten our belts now. We have to acknowledge the institutional architecture which is emerging," he said.
India has some commitments under the WTO's Agreement on Subsidies and Countervailing Measures, he said, adding that under this, if a particular sector would reach to a certain level of competitiveness, it would not be entitled for subsidies.
India's textiles industry has reached that level and as per the norms it would lose the subsidy benefits now.
Citing World Bank data, he said India's per capita income was USD 994 and the moment it reaches USD 1,000 per annum, "you lose your entitlement to export subsidies".
"This data comes with a two year lag. Now in 2015 we are expecting that data. The data might show that we have crossed USD 1,000 limit. If the data lag comes with two years gap, then by 2017 we should be crossing that stage. So clearly we must plan for it," he added.
However, Kher said that India will give subsidies to those sectors which are not competitive.
"We are not phasing out the subsidies. We are giving export subsidies because they are legitimate but the attention that we are drawing of the stakeholders is to the fact that subsidies on some of the products will come under the scanner because we will reach that point of competitiveness. But we will continue to give subsidies where ever they are required and legitimate," he said.
