Insights

Trade Defence Laws and Make in India

Govt. of India launched the Make in India initiative in 2014 with the primary objective of making India a global manufacturing hub, by encouraging manufacturing on Indian soil. The initiative aims to raise the contribution of the manufacturing sector to 25% of the GDP by the year 2025 from its then current 16%. Make in India targets major sectors of the Indian economy which range from automobile to Information Technology (IT) & Business Process Management (BPM). The initiative also aims at creating jobs, enhancing skills and protecting intellectual property rights. Four pillars of Make in India are New Processes, New Infrastructure, New Sectors and New Mindset.

Trade Defence Laws are aptly supporting the cause of “Make in India”, which has been much talked about; and with which Govt. and Industry are trying to work towards a more conducive manufacturing and trade environment by updating/ modifying domestic tax and policy regime. These laws which are framed by many countries as per WTO agreements- protect interest of domestic industry. There are three main laws under WTO regime which can be considered by the industry a) Anti- Dumping b) Anti- Subsidy c) Safeguards. While Anti- Dumping and Anti- Subsidy are to provide level playing field to the domestic industry, Safeguards is to protect industry from surge in imports which causes serious injury.

Indian domestic manufacturing industry has significant potential to grow; much growth has happened, however much growth has to still happen. A sustained growth requires conducive manufacturing and trade environment, which can be ensured only through effective domestic & international trade policies along with ideologies like Make in India. And of course since all policies are driven by laws, it is of prime importance to have laws which ensure relief to the industry. Robust Anti- Dumping, Anti- Subsidy and Safeguards law are therefore required at all times.

Though these laws protect interest of the industry, they need critical review time to time for justice to prevail in current scenarios. Old law in an environment wherein trade patterns change with time so quickly that justice announced might not safeguard interest of the domestic industry- needs attention. Further, law needs to be modified to encapsulate policies including ideology of a country like Make in India.

While various areas are touched upon in order to realize Make in India to its fullest potential, more focus should be on areas which will have direct positive impact. Amendment in Trade Defence Laws viz. Anti- Dumping Law, Anti- Subsidy Law and Safeguards Law to ensure better investigation results and better protection to the industry is of high importance, therefore.

Global trade activity has been changing, especially with increasing free trade agreements. India has also been quite aggressive in signing trade agreements, in a run towards globalization. While all trade such trade agreements out of WTO regime have sufficient provision to allow invocation of trade defence action in case of any injury to the domestic industry or surge in imports from any of the partner countries, it is utmost important for a country to notify rules for the industry to request invocation in situations when there is sudden increase of imports or imports increases to a level when there is likely serious injury to domestic industry. India has signed more than 15 trade agreements by now; however, in most agreement while there is a provision of Safeguards, no rules have been notified even when industry seem to be suffering.

While we work towards a better tomorrow with initiatives like Make in India, identifying little gaps which can cause major dent, and filling up those gaps, is quite critical. Trade Defence Laws therefore are in the right framework with regard to Make in India, however, critical review of these laws to ensure they are updated for quick relief and justice of highest standards to domestic industry has its own substance.