Protectionism will only Deepen Recession; Anand Sharma Tells US & German Legislators
India Pushes for Revival of GSP
The Union Minister of Commerce, Industry and Textiles, Shri Anand Sharma has stressed the need to avoid protectionist tendencies by the developed economies. Speaking to a delegation of the US- Congress and German- Bundestag, here today, the Minister said “crisis leads to inward thinking but protectionism is counter-productive as it deepens recession. Wherever protectionism has been resorted to, it has never helped.” He further said that, there is a need to sensitize the US policy makers about the actual nature of outsourcing as it is well documented that for every job that is outsourced there are higher end jobs created in the outsourcing economies. The Minister emphasised that Indian companies are a major source of employment generation in the US market. ‘We need to engage more not less” the minister added.
The Minister expressed confidence that the U.S. Generalized System of Preferences (US GSP) scheme, which expired last December, will be revived soon by the US Congress with full and long term reauthorization. The U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. Citing the adverse impact on employment in vulnerable sectors, the Minister said that US Government has withdrawn the GSP benefit in respect of a number of products from India, e.g. jewellery. However, he pointed out, the benefits have not gone to any LDC beneficiaries but to major trading partners like China and France.
The Minister also assured the legislators of India’s firm commitment to the processes of liberalization and economic reforms. He said that fundamentals of Indian economy are strong and there are a slew of reforms measure in the pipeline like National Manufacturing policy and FDI in retail that will further prop up the growth trajectory. Shri Sharma remained optimistic of continued high GDP growth rate. “FDI is looking good after a disappointing last year. We hope to make up for the lost ground this year” Shri Sharma added
During the meeting the Commerce Minister informed that Germany and US are India’s big trading partners. USA is one of the largest trading partner and a leading export destination. For the period April to March 2011, USA accounted for 10.17% of India’s exports and around 5.26% of India’s imports. India’s export to the US consists of Gems & Jewellery, Drugs, and Pharmaceuticals & Fine Chemical. Bilateral trade between India-Germany in 2009-10 was about U S $ 15.73 billion with exports from India to Germany in 2009-10 valued at US $ 5.41 billion and imports from Germany to India at US$ 10.31 billion in that period. Exports to Germany have registered a growth of 25.33% at US $ 6.78 billion and imports have grown by 10.95% to US $ 11.44 billion in 2010-11 as compared to 2009-10. Top sectors of imports from Germany are Machinery, Transport equipments, Electronic goods, Project Goods, Organic Chemicals etc. Germany is the 8th largest investor in India with cumulative FDI from Germany totaling US $ 3.05 billion. The FDI during the year 2010-11 is to the tune of US $ 0.20 billion. He further explained, “While India places great emphasis on its external sector, Indian economic growth is fundamentally domestic-demand driven rather than export-led. India has tended to import more than it exports. As such, its growth will contribute to the global recovery process.”
US Congress delegations comprised of: Mr. Steve Cohen, Mr. Bob Goodlatte, Mr. Alcee Hastings, Ms. Eddie Bernice Johnson, Mr. Jim McDermott, Mr. Gregory W. Meeks,Mr. Nick Rahall II The German Bundestag had Ms. Gisela Pitz, Mr. Frank Schwabe, Dr. Carsten Sieling, & Mrs. Alexia Sieling as their representatives.
A US Congress – German Bundestag delegation comprising eight US Congressmen and four members of German Bundestag is visiting India on a study tour from 31 August to 4 September 2011. The study tour aims to improve the understanding of U.S. and German parliamentarians of India, India’s external relations and India’s domestic policies.
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