November 2019


Media coverage in India this month focused on German Chancellor Angela Merkel’s India visit and meeting with Prime Minister Narendra Modi, India pulling out of the Regional Comprehensive Economic Partnership comprising of 10 Asian nations including China, Australia, New Zealand, Japan, South Korea and the Supreme Court verdict on the 70-year-old land dispute in Ayodhya.

India Pulls Out of Regional Comprehensive Economic Partnership (RCEP)

India pulled out of the RCEP, which proposed to create a common trade block covering most of Asia comprising 10 ASEAN nations along with China, Australia, New Zealand, South Korea, and Japan. Media publications weighed in on the implications of India’s exit from the RCEP for both, the country’s trade relationship with other countries in the RCEP and on India’s manufacturing sector, through a series of op-eds.

An op-ed in The Economic Times supported the decision to drop out of the RCEP outlining how trade agreements with the US and EU over the RCEP would help improve competitiveness of the Indian industry. “Industry bodies, farmers and civil society organisations believe that unless India’s concerns are resolved, India shouldn’t join this grouping under any time pressure. India Inc was particularly keen that ‘Make in India’ doesn’t get affected by RCEP, where certain automatic triggers are not allowed to be in place to stop excessive imports… Of the 15 countries in RCEP, India has a trade deficit with 11 of them… During the last few years, important geographies like the EU and the US may not have been given due attention. So, it’s heartening to hear commerce and industry minister Piyush Goyal say that efforts are being made to renew negotiation efforts for the India-EU bilateral trade and investment agreement (BTIA)… Also, efforts are reportedly on from both sides to come to an agreement on an India-US limited trade deal. The US and EU together constitute one-third of India’s total merchandise exports. India has to hold on to its existing share in these two large traditional markets and could further increase share with the help of preferential trading arrangements (PTAs). What India needs now is an approach to FTAs based on the recognition of its core competencies. There has to be a renewed thrust on enhancing competitiveness of India and Indian industry.”

Another op-ed in Indian Express opposed the decision to drop out of the RCEP stating that it reflected the desire to protect the short-run interests of Indian industry instead of the long-run interest of enabling it to compete with the world. “Foreign competition can play a decisive role in forcing one’s own firms to do a better job. As the Indian economy opened up post 1991, that is exactly what happened… Imports soared after 1991. But, as firms rapidly became more competitive, exports soared too. India’s share of world exports, which had fallen to 0.5 per cent in 1991, rose to 2 per cent by 2010. Foreign firms invested in India, and Indian firms invested abroad. Exports were a substantial driver of our growth performance, contributing roughly a quarter of our record 8 per cent growth between 2000 and 2010. The Indian economy integrated with the world… A perception exists across Indian industry that it has suffered as a result of our trade agreements. Instead, the facts show that they have had little impact. In 2000, before we signed any trade agreements, 17 per cent of our imports came from and 15 per cent of our exports went to countries we later signed trade agreements with. In 2018-19, 18 per cent of our imports and 18 per cent of our exports went to countries with trade agreements. Overall, a negligible impact. Instead, China, with whom we have no trade agreement, has seen the biggest jump — from 2.6 per cent of our imports in 2000 to 13.7 per cent last year…”

Finally, an op-ed in Livemint covered why there was massive resistance to the idea of joining RCEP across sectors in India, most of which are vulnerable to the import surges that could and might follow a RCEP kind of free-trade agreement.  “In this context, it is important to note that India already has free-trade agreements with Asean since 2009, South Korea since 2009, and Japan since 2011. In addition, RCEP includes China, Australia, and New Zealand. The experience since then has been instructive. Between 2014-15 and 2018-19, India’s trade deficit increased from $13 billion to $22 billion with Asean, from $9 billion to $12 billion with South Korea, and from $5 billion to $8 billion with Japan. Obviously, these agreements led to a far greater increase in imports than in exports. In fact, India’s exports to these markets witnessed a stagnation, just as its total exports did… The manufacturing sector, which has been hurt by imports of goods from China, so much so that deindustrialization is discernible. The problem would certainly have been exacerbated by joining RCEP, as rules-of-origin can be easily circumvented and Chinese goods could have been routed through other member countries… Government negotiators bargained for safeguards that would protect the domestic industry from import surges and also for provisions for market access in services that could be competitive. This was not forthcoming. Under the circumstances, it was both necessary and desirable to opt out of the free-trade agreement.”

India, Germany Sign Over 20 Agreements Across AI, Green Urban Mobility and Agriculture

German Chancellor Angela Merkel met Prime Minister Narendra Modi during her two-day India visit for the fifth round of the biennial Inter-Governmental Consultations (IGC). During this trip, Germany and India signed 17 agreements and five joint declarations of intent in fields spanning space, civil aviation, maritime technology, medicine, yoga, education, and resolved to jointly combat terrorism. Various media publications have weighed in on how the German Chancellor’s visit could impact India-Germany relations over the coming years.

The Indian Express outlined how this engagement could restart discussions on the Free Trade Agreement (FTA) between India and the European Union and why signing the FTA would result in German investors increasing investments in India. “Broadly, discussion between the two countries ranged in fields such as artificial intelligence and digital transformation, trade and investment, climate and sustainable development, “bringing people together” and sharing global responsibility. For the development and use of AI, Germany and India agreed to work closely together to conduct bilateral and multilateral research and development activities… Over 1,700 German companies operate in India and an FTA would bring an end to the uncertainty faced by these investors, especially after an investment protection agreement between the two countries came to an end in 2016. Furthermore, because of the complicated bureaucratic procedures in India, German investors hold back from making investments. Merkel said that Germany will spend up to 1 billion euros in India over the next five years as part of a new partnership between the nations on green urban mobility.”

A column in The Hindustan Times covered why expertise of economic power houses like Germany could help develop Prime Minister Narendra Modi’s vision to build a “new India” by 2022. “Germany is India’s largest trading partner in Europe and more than 1,700 German companies operate in the country… “There is a strong will to do business in India,” Merkel said and added that it was clear that New Delhi was “very serious” about transforming India into a modern industrialised nation through Make in India- a government initiative to encourage global players to manufacture in India. She went on to add that the agreements showed the area of cooperation between the two nations was very wide. She also said Germany intended to work very closely on sustainable development and climate protection with India.”

An article in the Livemint detailed out how the agreements signed between the two countries would deepen strategic cooperation and strengthen bilateral trade over the coming years. “Bilateral trade between the two countries rose to $24.06 billion in 2018-19 from $22 billion the previous year, while German companies have invested nearly $12 billion in India since 2000. The agreements struck on strategic cooperation, included agriculture, cyber security and artificial intelligence. Modi said the two countries would also bolster ties to combat “terrorism and extremism”. Germany and India also agreed to join hands in the area of education. … Although Merkel and Modi didn’t mention anything about restarting talks on finalizing a free trade agreement between India and the EU, people familiar with the matter earlier said the two leaders could take up the trade deal… Eric Schweitzer, president of the Association of German Chambers of Commerce and Industry, earlier said India had enormous potential but there has been uncertainty among companies after an investment protection agreement between the two countries ended in 2016.”


Five Judge Bench of Supreme Court Announce Ayodhya Verdict

The Supreme Court ruled that the entire 2.77-acre disputed land in Ayodhya be handed over to a trust to be constituted for the construction of the Ram temple and ordered the government to give Muslim parties an alternative 5-acre plot in a prominent place, bringing to a closure a case whose legal genesis can be traced back to 1885. Media publications have unanimously applauded the verdict stating that this could hopefully bring to an end an almost 70-year religious dispute in the country.

An op-ed by Lok Sabha Member of Parliament Afzal Ansari in Livemint focused on how the court ruling has something for followers of both religions and gives both the Hindus and Muslims a golden opportunity to spread peace, harmony and brotherhood.: “Our party [The Bahujan Samaj Party] and our leader have already said that we shall abide by the Supreme Court judgment. My party, I and our supporters accept the verdict. The court judgment has ended any one-upmanship of any party and as law abiding citizens, we have to from now on say that this is the judgment of the honourable court. The order has given the disputed site to a trust for constructions of a temple of Bhagwan Ram and five acres of land elsewhere to build a mosque. In a way it’s a win-win for both the religions… The closure of the political and religious controversy should now on give way to a bigger debate about how the state, centre and all political parties take that region on a development agenda.”

Another op-ed in the The Indian Express found that the Supreme Court verdict was prudent and practical and has finally brought closure to the long-standing dispute. “The Ayodhya verdict, given by a bench of five judges of the Supreme Court including the Chief Justice of India, hopefully, brought an end to this long-standing dispute. The unanimous verdict pronounced that the disputed land in Ayodhya will go to a government-monitored Trust to build a temple, and the Muslims will get a separate five-acre piece of land in the city at some “prominent” site… We should respect the judgment of the Supreme Court without trying to fit it into the landscape of justice and fairness as explained by Rawls. It is a closure of something perniciously erosive to the idea of India, the idea to which we all owe our allegiance. To be honest, our worry lies not in this verdict, but the verdicts which can come in the future. It is not a time to celebrate or mourn this judgment. It is a time to be alert to the idea of justice, to the idea of inclusion, to the idea of democracy and, most importantly, to the idea of peace.”

The same newspaper published a dissenting op-ed by the former Home Secretary, who took a negative view on the ruling, stating that the Supreme Court’s verdict was disconcerting and questioned whether the verdict would uphold and strengthen secularism in the country: “The Supreme Court gave a further boost to secularism by its rulings in cases pertaining to the governance of the country. Particular references may be made to the decisions by the court

Finally, an op-ed in The Hindu praised the bench for it unanimous verdict stating why it sends out a message that the judiciary has, with a single mind, ventured to give legal burial to a prolonged dispute that began as a minor litigation. “There comes a time when the need for peace and closure is greater than the need for undoing an injustice. In allowing a temple to come up through a government-appointed trust at the disputed site in Ayodhya, the Supreme Court has apparently chosen a path most conducive to social harmony… The Bench indeed has done well to record its revulsion at two incidents that represented an onslaught on the psyche of secular India: the desecration of the masjid in 1949 when Hindu idols were planted surreptitiously under its central dome, and the planned destruction of the whole structure by the foot soldiers of Hindutva on December 6, 1992… in the spirit of the ‘new India’ put forward by Prime Minister Narendra Modi, it would be in the fitness of things if the VHP and other organisations which participated in the demolition are expressly excluded from the proposed trust to build the temple. In paving the way for the building of a temple for Ram on the spot believed to be his janmasthan, the Supreme Court held up the faith of millions of Hindus. But it cannot allow the judgment to be perceived as an endorsement of any challenge to the rule of law in the name of faith.”