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Informist, Thursday, Feb. 27, 2025

 

--Sitharaman: Need to ramp up bilateral relationships with many nations

--CONTEXT: Minister Sitharaman speaking at Business Standard's Manthan summit

--Sitharaman: Multilateralism a thing of past now

--Sitharaman: Global trade up for a complete reset

--Sitharaman: Talent, technology key to India's role on global platform

--Sitharaman: Need to have rethink on most favourable nation provision

--Sitharaman: All nations must derisk from global supply chain concentration

 

NEW DELHI – India needs to focus on strengthening bilateral relationships with multiple countries as the global trade is up for a complete reset and multilateralism is now fading away, Finance Minister Nirmala Sitharaman said on Thursday. The minister's comment comes at a time when there are apprehensions of a trade war due to the shift in US' trade policy.

 

"The terms and references, with which all of us played trade, with some kind of anchor in the World Trade Organization, is no longer available for you," Sitharaman said at Business Standard's Manthan Summit. "There is no more MFN (most-favoured-nation). Every country wants to be treated special... We need to have a rethink on MFN and the bilateral arrangements that you do with countries. Bilateral relations are going to be the order of the day in terms of trade."

 

"The multilateral institutions, in the last two decades, you see them increasingly fading away. Any effort to revive them is not having the desired result," Sitharaman said.

 

According to the WTO's most-favoured-nation norm, countries cannot normally discriminate between their trading partners. That is, a country cannot impose different tariff rate on the same product for different nations. In violation of this norm, US President Donald Trump has announced the imposition of reciprocal tariffs on all nations, including India, based on the duty levied buy them on the US goods.

 

Trump aims to lower US' trade deficit and boost domestic manufacturing through the reciprocal tariffs, which are expected to rollout in phases starting April. The tariffs may have serious implications for India as the US is India's top export destination and New Delhi had a trade surplus of $35.32 billion with Washington in 2023-24 (Apr-Mar).

 

Thus, to protect itself from Trump's reciprocal tariffs, India has chosen to strengthen its bilateral relationship with the US through a trade agreement. Earlier this month, Prime Minister Narendra Modi visited the US and proposed a trade deal to Trump. The two leaders have agreed to negotiate a multi-sectoral Bilateral Trade Agreement and have set a target to take bilateral trade to $500 billion by 2030.

 

"It is very clear that when you get into a bilateral trade arrangement, your interest and the interest of your friendly nation is going to determine the movement of the goods," Sitharaman said, adding that it is also necessary for all the countries to derisk themselves from the concentration of global supply chain. In this context, India is comfortably placed, Sitharaman said. Besides the US, India is negotiating trade agreements with several others, including the European Union, the UK, Australia.

 

As the world "churns" a new order, India must invest in technology, and attract talent to emerge as a leader in the new global order, Sitharaman said. "Global reset is happening, and in that, we shall put India's interest first and on the top."  End

 

US$1 = INR 87.24

 

Reported by Krity Ambey and Sagar Sen

Edited by Ashish Shirke

 

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