Politics now ‘trumps’ economics; govt pushing trade pacts, ‘Make in India’: EAM Jaishankar

Kolkata: External Affairs Minister (EAM) S. Jaishankar on Saturday said that in the present era, “politics increasingly trumps economics”. He made the remarks after being conferred an Honorary Doctorate by IIM-Calcutta at its Joka campus.

“This is an era where politics increasingly trumps economics and that is not a pun,” S. Jaishankar said.

Elaborating on contemporary geopolitics, the EAM said the US is setting new terms of engagement and is dealing with countries more on a bilateral basis than through established regimes, while China has long played by its own rules and is doing so increasingly.

“In the ensuing scenario, other nations are unclear on whether their attention should be on the visible competition or the trade-offs and understandings that punctuate it,” he observed.

Faced with the pulls and pressures of globalisation, fragmentation and supply insecurity, S. Jaishankar said: “The rest of the world responds by hedging against all contingencies. Even as it engages the United States and China directly, choices are avoided where feasible and taken when beneficial. Simultaneously, other options between themselves are explored with greater urgency. One sign of that is the uptick in the enthusiasm today for free trade agreements across geographies.”

On supply-chain realities, he noted that roughly a third of global production currently takes place in China, placing a premium on resilience and reliability. Conflicts and climate events have increased the risk of disruption.

“When it comes to energy, the US has gone from being a major importer to a significant exporter of fossil fuels. At the same time, China dominates the world of renewables,” he said.

Turning to trade frictions, EAM Jaishankar said supply-side risks are aggravated by demand-side uncertainty.

“The salience of tariff rates to trade prospects has obviously heightened volatility and, as for finance, the prolific application of sanctions, the seizure of assets, and the advent of blockchain-based technologies are today part of the new realities,” he added.

The minister described India’s ‘Make in India’ push as a major policy response to these global shifts.

“How does India respond to these new realities? By pursuing policies and taking actions that advance our comprehensive national power, reduce our vulnerabilities, and promote our influence. Now the last two clearly constitute the core of our diplomatic activities. As India rises and our economy grows, we are preparing to shoulder more responsibilities in this regard.”

S. Jaishankar argued that a major power must have a substantial industrial base — an assumption, he said, not always accepted by policymakers before 2014.

“Promoting industrial growth and even incentivising it is today a key economic priority. The emphasis on ‘Make in India’ in the last decade speaks of a different mindset and greater ambition,” he said.

For industry to realise its full potential, he urged corporate India to look beyond the short term and help build domestic supply chains even as it participates in global networks.

“As it strikes roots, ‘Make in India’ is strengthened by research in India, innovate in India, and design in India,” he said.

S. Jaishankar concluded that, in an uncertain world, diversifying supply sources is essential to guarantee national needs.

“With these considerations in mind, we are today endeavouring to forge new trade arrangements and promote fresh connectivity initiatives. While they certainly represent key facets of our policy priorities, it also speaks for the importance that the world attaches to ties with India.”

He added: “As we ascend the global economic hierarchy, the case for them will only get stronger. These exercises have long-term repercussions and therefore need to be embarked upon with great judiciousness. When it comes to trade, we will naturally be guided by our people-centric vision, just as our connectivity plans will be guided by strategic as well as economic considerations.”

–IANS