Oct 05, 2024 12:17 AM IST
At a time when government has come under criticism for the trade deficit with China, Goyal said India’s trade deficit grew at a compounded annual growth rate.
Washington: Union commerce and industry minister Piyush Goyal said that India’s trade deficit with China ballooned under the Congress-led government between 2004 and 2014 and slammed party leader Rahul Gandhi for praising the Chinese model when the world had come to recognise its malpractices. He also accused the grand old party for pushing India in the direction of effectively a free trade agreement with China.
Goyal also claimed that the Narendra Modi-government at the Centre had brought back “manufacturing mojo” to India, and said that merely maintaining the contribution of manufacturing to GDP around 17% in the past decade, in adverse circumstances and inflow of goods from “non transparent” countries, was a major achievement.
Before wrapping up his US visit on Thursday, Goyal first spoke about India’s manufacturing at the Center for Strategic and International Studies and then interacted with reporters at the Indian embassy in Washington DC.
In response to a question from HT on why despite the government’s efforts, the share of manufacturing hadn’t grown in the past decade, Goyal first offered the context in which the government had taken office in 2014; of low growth, high inflation, low forex reserves, corruption scandals, poor investor sentiment, dismal stock market numbers, low morale, and a weak currency. He said it had then been a painstaking task to stabilise macroeconomic fundamentals, revive investor sentiment, ensure ease of doing business, ease processes and laws, and this had resulted in sustained high growth, the lowest inflation in a ten-year period, booming markets, and twice the foreign direct investment in the past decade than in the preceding decade.
He then pointed to Covid-19 and two wars, and inflow of goods from “non transparent economies”, and argued that just maintaining India’s manufacturing was “a matter of great satisfaction” when it could have “collapsed”.
Responding to a question on Rahul Gandhi’s critique of India’s inability to offer a country to China’s production story, Goyal first said that he didn’t believe in doing domestic politics on foreign soil and berating one’s own country. But he then added, “As regards China, it is very sad that some people, possibly responsible for the growing influence of China in the Indian industry, are choosing to continue to praise or defend the China story, whereas the whole world today recognises that China is a non-transparent and opaque economy.”
At a time when the government has come under criticism for the trade deficit with China, Goyal said India’s trade deficit with China grew only at a compounded annual growth rate of just over six percent between 2014 and 2024, compared to a CAGR of 42.85% between 2004 and 2014. “If that did not kill manufacturing, what did?”. He said that it was a matter of “shame” that India had reduced duties in that period, and allowed “substandard..opaquely-priced..non-transparent” Chinese goods to “flood the Indian markets, kill Indian manufacturing, almost get investors disinterested in the India story” because there was no protection against these kinds of goods coming in from China.
Goyal alleged that the last government had also forced India into the Regional Comprehensive Economic Partnership which was effectively an FTA with China because India already had FTAs with 12 of the 15 countries in the bloc. “India was forced to join that group into the RCEP by an executive action of the then government..They forced India into the RCEP negotiation. It basically was getting India to do an FTA with China. Imagine what that would have cost India.”
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