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India Can Benefit From GVCs With Right Policy Mix

Jan 03, 2020

An interactive programme on first-ever release of World Bank’s World Development Report 2020 ‘Trading for Development in the Age of Global Value Chains’ was organised by MVIRDC World Trade Center (WTC) Mumbai and All India Association of India in association with Meghnad Academy of Economics. Dr. Aaditya Mattoo, Chief Economist, East Asia and Pacific Region, World Bank who co-led the Report made a presentation on it. Dr. Mattoo said, “Global Value Chains (GVCs) can be a path for economic development if India implements deeper economic reforms to support manufacturing sector, consolidate its strength in the services sector and cooperate with foreign countries on issues beyond trade. Reforms such as a liberal trade policy, conducive land and labour laws are needed to attract manufacturing investments. India needs to consolidate its strength in the services sector by upgrading its higher education and skill development. Thirdly, India needs to cooperate with foreign countries on issues such as taxation, competition policy, data protection etc.”

Mr. Siddharth Rastogi, Managing Director, Ambit Capital Pvt. Ltd. suggested Indian exporters to target USD 14 trillion global market for advanced manufacturing products such as integrated circuits, computers and its parts, solar panel diodes and other high tech products.

Mr. Rastogi remarked that India will gain from Global Value Chains only if it shifts its focus to high end manufacturing products by adopting cutting edge technologies and innovation.

Mr. P. D. Singh, Managing Director, J.P. Morgan India moderated the panel session during the programme.

Mr. Vijay Kalantri, MVIRDC WTC Mumbai said, “All legislations must be designed after comprehensive discussion with stakeholders to avoid complications at the implementation stage.”

On the taxation front, the government needs to eliminate multiplicity of taxes and reduce GST rates to 14%, which is the average rate across countries that have implemented GST. Empirical evidence suggests that low tax rates leads to increase in tax base and buoyancy in tax revenue.”

Mr. Kalantri also suggested government and Reserve Bank of India to infuse liquidity into the industry to promote consumption-led economic growth.

Ms. Rupa Naik, Senior Director, MVIRDC WTC Mumbai suggested Government of India to establish institutional mechanism for investor aftercare to facilitate new investors to navigate through administrative procedures. Similarly, there is a need to address the constraints facing India’s agriculture sector, MSMEs, start-up enterprises and women entrepreneurs, who contribute significantly to economic growth, but suffer from lack of access to credit and business support services.

In Photo:

From (L-R): Mr. Vijay Kalantri, Mr. P. D. Singh, Dr. Aaditya Mattoo, Mr. Siddharth Rastogi and Ms. Rupa Naik.