Sanctions imposed on India following Pokhran II will undoubtedly have some effect. Half a billion dollars of Japanese aid is in jeopardy.German aid negotiations have been called off. Indo-American collaboration in some projects, such as for the light combat aircraft, faces an uncertain future. The US Exim Bank's lines of credit may not be available for infrastructure projects.World Bank and Asian Development Bank projects totalling almost a billion dollars have been put into cold storage. Indian companies making overseas borrowings will have to bear higher interest costs amounting to nearly $40 million (Rs 160 crore) per year.There is a silver lining. Despite the impact of the sanctions, the economy will not be crippled. We will be saved simply because we are more of an open economy now than we were a decade ago, because we are more trade-oriented than aid-oriented.A growing number of foreign companies have an expanding stake in India's prosperity and there's an increasing number of Indian companies with global stakes.Mercifully, there seems to be a breeze of pragmatism blowing across the saffron curtain. Although it is doing so in a knee-jerk manner, the Government is clearing many joint ventures in oil exploration and production and in mineral prospecting. This flurry of activity should not peter out.There are other areas, like insurance, where the Indian market can be used as a bait to entice well-connected foreign companies. For instance, one of the most influential men in Washington is Hank Greenberg of the American Insurance Group (AIG).Allowing publications like The Wall Street Journal and Time to publish in India - as they have been trying to do for the past few years-will provide us new champions. We must carry forward liberalisation not just because it will help us beat sanctions, but also because it is in our economic and technological interest to do so.Investment by itself does not gain us lobbies. Trade does so instantly. True, investment and trade are interlinked. If more MNCs invest in India, it will trigger more imports and exports. This, however, is in the long term. In the short term, it is pure and simple trade that matters.China's leverage comes from a voracious appetite for imports. China buys eight times the amount of goods from the US than we do. This, more than anything else, gives China that extra leverage. Over 200,000 American jobs are dependent on trade with China.Fourteen per cent of Boeing's sales are to China alone. The localisation of Windows software in Chinese has created a multi-billion dollar market for Microsoft; India remains merely a source of cheap manpower for the company.We must continue with trade policy reforms. Small-scale reservations are hampering faster export growth in industries that matter, like textiles, consumer goods, toys and light engineering.The United Front government had agreed to a six-year phase out of quantitative restrictions (QRs) on 2,700 odd goods, commodities and products by March 31, 2003. By this date, all these will be freely importable into India but at certain tariff levels..preferred-source-banner{ margin-top: 10px; margin-bottom:10px;}India and the US are, however, locked in a dispute over this at the WTO. A solution is at least three to four months away. It is in our interest to settle it by offering to front-load 200-300 items of significant interest to the Americans.Meanwhile, India should seize the initiative and boldly declare it is removing all QRs over the next four years. Instead of year by year announcements, the entire four-year schedule should be made public straightaway. This will also give time to domestic producers to brace up for international competition.There are other pressing WTO obligations that have still to be met. We have yet to carry out changes in our patent laws even though we have lost all appeals at the WTO and have just another 11 months to meet the obligations.Again, these changes are needed not just to meet WTO commitments but because a world class system for protecting intellectual property rights will strengthen Indian science and technology which has found a latter day Nehru in Atal Bihari Vajpayee.Japan requires careful handling. Manmohan Singh and P. Chidambaram had invested a great deal of personal effort and time on Japan. It had begun to pay dividends. But this has now received a setback-and we are not helping ourselves by foot-dragging on the Maruti-Suzuki dispute.Japanese sentiments have been hurt. It will require painstaking diplomacy to restore India's image.Finally, the Indian diaspora in the US will play a key role in managing the fallout. It is rich and influential. When the then finance minister faced difficulty in meeting Senator Jesse Helms in October 1997, it was Swadesh Chatterjee, a well connected North Carolina based Indian-American, who delivered.Among all political parties, the BJP is best organised to mobilise the ABCDEFGHIs (American Born Confused Desis Emigrated from Gujarat, Hindu Indians). But this should be a national and not a partisan effort. And it must be part of a well-orchestrated plan for building long term relationships-and not just a short-term damage control exercise.- The author is Secretary, Economic Affairs Department, AICC. Published By: AtMigration Published On: Jun 8, 1998--- ENDS ---
