INDIA warned yesterday against protectionism as the world grapples with the sovereign debt crisis, portraying itself as a relative haven of stability in troubled economic times.
Commerce minister Anand Sharma said India was an influential emerging economy and that the country “will be part of the stabilisation process when it comes to what’s happening in Europe”.
But he warned: “In difficult times, the tendency to look inwards, to have protective measures… is something the G20 must reassure the world that we will not allow that to happen.
“We need it (the G20) to engage more, not going for protectionism because that has happened since 2008-09,” he told delegates at the India economic summit in Mumbai.
“We must first put in place a multilateral trading system by completing the ongoing WTO (World Trade Organisation) negotiation (and) correct historical imbalances to make this order more equitable and more accessible.”
Hundreds of international policymakers and industry leaders have converged in the financial hub for the annual summit, hoping that India can provide a rare chink of light as the global economy falters.
India emerged relatively unscathed from the last global economic downturn in 2008, largely because most of its demand for goods and services was met domestically.
Its tightly regulated banking and financial sectors were also less exposed to overseas troubles.
Prithviraj Chavan, the chief minister of Maharashtra, of which Mumbai is capital, said India was on a “high-growth trajectory going into the next decade”.
“India offers a refuge for long-term investment in pensions, insurance and banking… Emerging markets will play an increasingly important role in the stabilisation of the global crisis,” he said.
India, however, is still facing a squeeze from high inflation that has hit investor confidence and also threatens government ambitions to lift millions out of poverty.
India’s stock markets have slid as much as 20 per cent this year, making them among the worst performing globally, while companies have seen falling profits due to rising input costs and weak demand from the troubled eurozone.
The central bank governor said in October that India’s economy was likely to expand by 7.6 per cent in the financial year to March 2012, lower than an earlier forecast of 8.0 per cent.
Local financial experts said they were still confident in India’s economic expansion, despite signs of a slowdown that has undercut hopes that it can help power global growth.
“India’s structural growth story is intact. It’s not broken, despite near-term concerns,” Sandeep Naik, co-head of private equity advisory group Apax Partners, told delegates.
Udayan Sen, chief executive of Deloitte India, agreed, saying that India was “trending down but not collapsing”, with continued robust demand domestically.
Business leaders at the summit called for much-needed institutional reform, as well as improvements in infrastructure spending, transparency and governance.
Tackling endemic corruption, which earlier this year prompted millions of ordinary Indians to take to the streets to protest, was also key, participants said, amid indications that graft was hitting overseas investment.
The chairman of the giant Godrej Group and president-designate of the Confederation of Indian Industry (CII), Adi Godrej said tackling corruption could be worth “one percentage point to GDP”.
“It will aid considerably both foreign and Indian investment in India,” he added.
