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Growing Protectionism (Reason (Low growth(median income) in advance…
Growing Protectionism
Reason
Low growth(median income) in advance economies
recovery from financial crisis
have generated political support to undermine international trading relationships
Trade deficit of USA with countries:
China :300B
Germany :68B
Mexico: 62B
India :30B
Events
USA H1B review
Australia 457 visa abolished
New Zealand introducing tougher response
Impact of widening trade deficit of India
Demand for FOREX> supply : weaken home currency
Country looks at foreign investors to make up the gap between Import-export
make local factories shutdown --> due to competitions
Outcome
IT growth affected
exporter of agri-commodities, textiles and apparel affected
India's response
Nirmala Sitharaman hint on taking counter measure on US companies
IT companies to be blamed for not realizing that labor-cost arbitrage model has limitations
US is not the only country making this move
India needs FDI to fuel its growth
What Should India Do?
Aggressively voice its concern in bilateral and multilateral forums