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Source: The post is based on the article “A low-tariff regime can do India a world of good” published in the Livemint on 19th November 2022.
Syllabus: GS – 3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Relevance: About challenges faced by the Indian economy.
News: The deputy managing director of the International Monetary Fund has said that a global need to diversify purchases had generated interest in India in other words “The world is looking at India as a destination for investment.”
What are some major remarks of the IMF deputy manager on the Indian economy?
There is a global demand weakness as imminent and tighter financial conditions as a potential trouble. The risks of supply over-reliance on China gain salience globally.
-Indian exports are showing signs of slowing down and dearer dollar debt has drawn capital out of the country and hit the rupee.
-Smartphone factories are improving in India due to production-linked incentives for manufacturers. Further, private funds have also started coming into other industries. However, their performance is too small for job generation and remains as a challenge in the trajectory of India’s economic growth.
–Retrospective taxation, rejections of foreign dispute settlements and a revenue-sharing clutter in telecom have created a bad reputation.
–Land acquisition has not eased and India’s labour market stands with great gender imbalance.
What should India do to boost its economy at the global level?
As global-scale manufacturing today tends to span multiple borders hence integration with supply chains is crucial.
Indian policymakers are keen to establish India as a factory for the world. But it is still a steep ambition, and achieving it will need well-rounded policy alignment.
The government has cut taxes for new ventures and sought to slash red-tape and eased tax remission for exporters. A lower-tariff regime will also push local producers to generally get more competitive.