Trade winds

For the first time in 13 months,theres good news for Indias exporters. Exports as a whole finally showed positive growth in just-released figures for November 2009. According to the commerce ministry,they grew 18.2 per cent that month over the previous November: going up to US$13.2 billion (Rs 61,500 crore) from US$11.2 billion (Rs 52,000 crore). This is an encouraging sign; though,given that Indias imports continued to fall as compared to previous years,it is far from the case that the open sectors of Indias economy are back to normal. And,indeed,normal itself is being redefined.

This January 1,two major trade agreements went into effect. Neither removes all barriers to trade,but both are significant. The first,signed on August 7,2009 after over three years of negotiation,is with South Korea. It immediately removes tariffs on a subset of traded goods; over the next few years,other tariffs will be phased out especially on cars. South Koreas exports were booming in December,with overseas shipments increasing by 33.7 per cent. Indian agribusiness,in particular,will benefit from access to Korea; and Korean investment in India should increase. The second deal has been more controversial. India and the Association of Southeast Asian Nations,or ASEAN,were in negotiations for 6 years before they signed an agreement,also last August. There were immediate rumblings of fear especially from Kerala,where some large plantation farmers,hitherto protected by high tariffs,will now face stiff competition from imports.

But productivity in large plantations in Kerala has consistently declined; they cannot be protected forever. Other sectors have also expressed concerns that India hasnt got as good a deal in terms of market access as ASEAN has. But these worries are minor in comparison to the extra competitive discipline on Indian industry,as well as the great benefits to consumers. As of January 1,trade with Singapore,Thailand and Malaysia became freer; the other ASEAN nations are expected to ratify the FTA in the next few months. Yet,even we move towards freer trade with more countries and,hopefully,2009 will be the year in which the WTOs Doha round too finally concludes Indias trade infrastructure will struggles. It was reported recently that government-controlled ports might miss their expansion targets. The governments big push on road and power has this newspapers support. But efficiency increases in ports must be high on the agenda,too.