China’s non-tariff barriers biggest trade hurdle, says FM Sitharaman

Finance Minister Nirmala Sitharaman on Friday flagged persistent non-tariff barriers and the growing trade imbalance with China, saying India has made little progress in securing market access for several of its products despite years of engagement with Beijing.

India has repeatedly sought greater access to the Chinese market for generic medicines, bovine meat, vegetables and other perishable goods, but restrictions continue to hamper exports, Sitharaman said during an interaction with the Atlantic Council on the sidelines of the IMF-World Bank annual meetings in Bangkok, Thailand.

“Non-tariff barriers are the biggest hurdle in the trade between India and China,” she said, pointing to phytosanitary measures and other restrictions imposed by China despite the scope for resolving such issues through discussions and investigations.

India-US trade deal should be concluded soon

Sitharaman also expressed hope that the proposed India-US trade agreement would be concluded at the earliest, citing its importance for global trade and economic ties between the two countries.

“I think recently the Indian Commerce Minister has also spoken that they expect and wish to have the agreement signed soon. Negotiations have been going on. I hope, in the interest of global trade and in the interest of trade between the two partners, India and US, the trade agreement gets concluded at the earliest,” she said.

Commerce and Industry Minister Piyush Goyal said on Thursday that the first phase of the India-US trade pact had been finalised and was undergoing legal drafting.

Sitharaman said India had refrained from imposing punitive tariffs on trading partners to address large trade imbalances, choosing instead to pursue negotiations, even when the process took time.

BRICS is about cooperation, not countering other blocs

On BRICS, Sitharaman said the grouping should be seen as a platform for strengthening cooperation and improving the welfare of its people, rather than as an alliance aimed at countering any particular country or bloc.

“I don't think BRICS's intention is to counter others. It is more to strengthen the partnership through the BRICS,” she said. She noted that BRICS represented nearly 40% of the world's population, adding that closer cooperation among member countries could boost trade, improve mutual understanding and create wider economic opportunities.

With new members joining the grouping, 11 to 12 countries were actively engaging with one another, collectively accounting for around 45% of global trade, she said.

Infrastructure spending has supported India's growth

Sitharaman said India had sustained strong economic growth despite global disruptions and remained the world's fastest-growing major economy over the past four to five years, particularly in the period following the Covid-19 pandemic.

She attributed the country's performance to inclusive growth, wider access to resources, skill development among young people, fiscal prudence and higher public capital expenditure.

The finance minister said public investment in infrastructure generated a stronger multiplier effect than transferring equivalent amounts directly to people. Infrastructure spending, she added, also created employment and supported economic activity across sectors.

According to Sitharaman, public investment helped channel money into the economy through job creation and related economic activity, while avoiding the same degree of pressure on the fiscal deficit that some alternative forms of expenditure could entail.

She also defended the government's borrowing strategy, saying debt-financed expenditure was being directed towards asset creation that would benefit the broader economy. “Borrowing goes for asset creation, and as a result, the economy has benefited,” she added.