Atmanirbhar Bharat, a sore point for western countries seeking trade and investment in India

India’s ambitious Atmanirbhar Bharat may be a sore point for some western countries, especially major economies like the United States, Japan and the European Union.

Several senior diplomats, according to Hindustan Times, have said that EU members and other western countries feel there is a need for more clarity about Atmanirbhar Bharat initiative and greater predictability about trade and investment regimes.

The Centre, in later half of 2020, declared Atmanirbhar Bharat or self-reliant India as the focal point of economic policies. Prime Minister Narendra Modi had also highlighted that this is not an isolationist approach, but rather a strategy to more closely integrate with global supply chains. He had specifically assured investors that the mission is not about being self-contained or closed off but to drive local reforms to encourage development.

An official said that many multinational companies have set up plants in Asian countries, while keeping an eye on the lucrative Indian market. “They need to change their approach now. India is not a closed market. Set up manufacturing facilities in India and get full access to the Indian market, so that its people will get jobs, the economy will grow and the market will expand further. It is in their interest to invest in India.”

Sources have highlighted that several countries have raised concerns about India’s changed policies that encourage local goods and services. Many of these countries want free access to certain sensitive areas, such as dairy and agriculture markets, which could be detrimental for the country’s rural and farm economies. Reports highlight that this was one of the reasons for the government to opt out of the Regional Comprehensive Economic Partnership (RCEP) agreements in Bangkok in November 2019.

Moreover, the government has imposed anti-dumping duties on Chinese goods. “Despite this, Chinese goods are entering India through other countries. Hence, the government is applying ‘rules of origin’ strictly, which is not liked by many trade partners,” an official said.

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He also brought to the fore that Japan had protested India’s decision to put ACs in the restricted list, leading to an 87% fall in Japanese AC imports to 74,000 units in January from 553,000 in the same month a year ago. “India has told of its willingness to provide all kinds of help, land and financial incentives, to all MNCs, including Japanese AC makers, in order to facilitate the setting up of their manufacturing facilities in India,” the official said.