India must insist on tech & rupee trade for all FTAs

THE world knows that India’s mega market notwithstanding, pockets of abject poverty remain. No government in India, irrespective of its political ideology, can, therefore, ignore this reality and must continue efforts towards making the economy more equitable.

A slew of Free Trade Agreements (FTAs) between developed countries and India are on offer. Hence, our policymakers must insist on two preconditions for any FTA. First, the transfer of critical state-of-the-art technology to India, and second, the acceptance of the Indian rupee as legal tender/currency of transaction between the parties involved in the FTA, thereby reducing the chronic pressure on the Indian currency and endless ‘de-valuation’ thereof.

Indeed, the suggested measures are easier said than done as no country, neighbour or superpower, however friendly, will ever give India the latest technology in critical sectors like defence. That’s understandable. Whether it’s the so-called globalisation or ‘decaying globalisation’, the transactional world believes neither in charity nor piety. Globalisation has turned into a nightmarish world of sanctions to punish, create bottlenecks and impose reckless prohibitions on anyone who is perceived as a threat to or an enemy of the West.

Hence, let India get real and ready to play ball and make the pre-condition to any developed industrial nation or organisation interested in having an FTA with New Delhi to first give specify the required technology before signing on any mutual agreement for access to a market of 1.4 billion people. For example, if any proposal comes from the British, combat aircraft power-plant technology must be insisted upon. If it’s an EU-India FTA, both fighter and transport aircraft engines should be the prerequisites for inclusion in the protocol agenda or the list of items proposed.

Enough is enough. It is time to address and curb the import mania of some Indians who tend to act as middlemen to get fat commissions in the name of cheap goods and quote the redundant cliché that ‘the consumer is the king’ who must get the so-called ‘quality’ imported stuff at throwaway prices. India should learn lessons from the American myopia and the European dystopia — of transferring their prime industrial production units (for cheap goods) to China 40 years ago and now shrieking and croaking like dying, headless chickens.

Regarding currency, the dominance of the dollar as reserve exchange is both unquestionable and indisputable even today. Nevertheless, what makes some countries apprehensive of the dollar is its brazen weaponisation by the Americans and their allies. Thus, there is an increasing Western propensity to punish smaller, weaker non-West nations with sanctions.

The Russia-Ukraine conflict has revived wide-ranging sanctions, which have created severe turbulence in international transactions. Consequently, the sanctioned countries are in search of alternative modes of payment to bypass the dollar. The aggrieved parties and their business partners are constantly trying to put their own currencies into the bilateral transaction baskets.

Although the problem for India at this point is not acute per se, difficulties are mounting — more so because Russia has been a reliable, dependable, diplomatic and transactional partner. Owing to the international energy trade’s heavy dollar dependence, India faces uncertainties from the web of US-sponsored sanctions in the oil and gas sector, especially with regard to Russia. There are too many West-imposed dos and don’ts.

Indeed, this is the prime reason that any Western country, individually or collectively, which is interested in having an FTA with India must ensure the inclusion of a rupee transaction along with the dollar, pound or euro. The EU is a developed, prosperous and high-tech grouping. Imagine the advantage of a consortium of 27 nations. Shouldn’t there be a level playing field for the currency transaction mechanism?

During Britain’s rule of India (mid-18th to mid-20th century), both the pound and the rupee were interchangeable currencies for business, education, travel and tourism. Hence, there is no reason why a time-tested system should not be reintroduced for bilateral transaction in an FTA between New Delhi and London.

The point is fundamental. In an FTA between one country’s market of 65 million people and the other’s 1.4 billion, the latter’s currency cannot be ignored or rejected for a mutual transaction. Similarly, if the 27-member EU’s market of 500 million and India’s market finalise an FTA, both the euro and the rupee must be tried out to be on a par for business and trade.

For rather too long now, the threat of sanctions and monopoly of the Western currency have made globalisation a classic one-way street, leading, at times, to a state of Western monopoly, much to the gross disadvantage and inconvenience of the Global South.

For more than five decades, the chronic depreciation of the Indian rupee — owing to its unacceptability born out of the volatility of Delhi’s recurring unbridgeable trade deficit — has painted a pathetic picture of the Indian currency in the world market. From Rs 5 to a dollar in June 1966, it is Rs 83-plus to a dollar today. That means, the Indian currency has fallen by Rs 78 in 58 years.

If this isn’t a serious matter pertaining to Indian economics, what is?