As India negotiates with other countries to hammer out a raft of free trade agreements (FTAs), analysts say New Delhi’s policies shouldn’t be driven by dogmas of any particular sector, but its focus must be on a judicious mix of interventions for both manufacturing and services.
Of course, some others feel that services exports need to be prompted more vigorously.
The debate on whether services should get precedence over manufacturing in the formulation of export strategy was reignited as, in a recent interview to a media outlet, former RBI governor Raghuram Rajan felt exports of information technology-enabled services, along with professional services such as legal, medicine, accounting, should be the focal point of India’s trade strategy and not manufacturing.
Nevertheless, the economists that FE spoke to said manufacturing needs “greater hand-holding” at the moment, as the country has some inherent strength in services. They were also unanimous in their clamour for removing structural bottlenecks — including a sharp cut in logistics costs — and negotiating for greater access to advanced markets to spur manufacturing. At the same time, they conceded that policymakers must come out with facilitative frameworks to widen the services export portfolio, the bulk of which is still driven by just IT and ITeS.
Read More at https://www.financialexpress.com/economy/manufacturing-needs-greater-hand-holding-now-than-services-economists/
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