New Delhi: The three contentious farm laws passed by the Narendra Modi government will enable farmers to reach out directly to American multinational firms such as Amazon and Walmart, said Mukesh Aghi, president and CEO of the Washington-headquartered trade advocacy body US-India Strategic Partnership Forum (USISPF).
In an interview with ThePrint, Aghi said that while the US supports the farmers’ right to protest peacefully, the three farm laws will provide them “more choices” and allow them to become part of global supply chains.
“The new law does not talk about providing access to multinationals. The new law basically provides openness to the farmers; they don’t have to go to mandis to sell their goods,” Aghi said. “They can sell their goods anywhere; so, I think this gives farmers the opportunity to look beyond. They can reach out to multinationals, they can reach out to Amazon or Walmart and, hopefully, be part of the supply chain.”
He added that American businesses and investors feel that the laws give Indian farmers an opportunity to earn more.
“Today, a farmer gets anywhere between 24 cents to a dollar and a lot of that money is used by the middlemen in the mandis itself,” he said. “So the reaction in the US is, yes, everybody has the right to protest in a democracy and we support those peaceful protests. But at the same time, there’s a due process in the law and when you look into the details, the law gives those right to the farmers. So the US supports the laws but at the same time also supports the protests.”
He, however, mentioned that the laws do not allow foreign companies easy access to the Indian agriculture market.
Also read: This is Vajpayee’s agriculture minister’s advice to Modi govt to end crisis over farm laws
‘Trade deal between US, India is important’
According to Aghi, the proposed free trade agreement (FTA) between India and US is “important” not just for advancement of the economic relationship but also for the progress of the geopolitical relationship.
“A trade deal between two countries is important. It’s not just about economic relationships but also about geopolitical relationships,” he said. “US companies will be keen to have some kind of a predictable environment and a trade deal will provide that.”
Under the Donald Trump administration, the US and India had put substantial focus on signing a mini-trade deal to be followed by an FTA. However, due to wide differences over issues such as market access for US agricultural produce and tariffs on some items, the limited trade deal hasn’t been signed so far.
The incoming Joe Biden administration has appointed Katherine Tai as the new US Trade Representative (USTR). According to Aghi, a trade deal is unlikely to be signed anytime soon and India may face some challenges as the Biden administration will put a greater focus on human rights and labour laws.
“The Biden administration is looking at India more as a geopolitical ally and it will not be as transactional as the Trump administration has been,” he said. “That means, it’ll be much more conciliatory towards working out a trade deal … Don’t expect a trade deal in the first 12 months of the Biden administration because the focus is going to be on China.
“The new USTR Katherine Tai is focussed a lot on labour and human rights and that’s where I see some of the challenges India will have with the US,” he added. “But, overall, I feel at some stage somehow we will see a trade deal happening between India and the US under the Biden administration.”
Also read: How faction-ridden AAP in Punjab is looking to turn farmers’ agitation into an advantage
Quad as an ‘economic zone’ to counter RCEP
Aghi also proposed turning the strategic grouping of Quad, or Quadrilateral Security Dialogue, into an “economic zone of sorts” to counter China’s influence in the Asia-Pacific region through the RCEP (Regional Comprehensive Economic Partnership) route.
The RCEP mega trade deal was signed between 15 countries — China, Japan, South Korea and Australia along with the 10-member Association of Southeast Asian Nations (ASEAN)— on 16 November and it is expected to come into force by the second-half of 2021.
ASEAN is made up of Indonesia, Thailand, Singapore, Malaysia, the Philippines, Vietnam, Brunei, Cambodia, Myanmar and Laos.
“There’s strong cooperation on the Quad side. The Quad is working very effectively and very efficiently,” Aghi stressed. “My proposal to both India and the US and to all the four governments is why can’t we percolate the Quad into an economic zone? Because as the RCEP comes in, the Quad can play a pivotal role for Indian exports and imports of capital into India. Investors are also keen.”
Quad is an informal strategic grouping set up between India, the US, Australia and Japan.
“You have cheap capital in Japan that is looking for investments and India provides the infrastructure sector for the Japanese capital,” he said. “Cheap capital is also available in the US as well as technology for the Indian market. You have innovation and commodities coming out of Australia. So it’s a win-win value proposition if we can find equitable ground for all four countries.”
‘India has to look at ESG factor’
Aghi believes, in a post-pandemic world, while American companies are looking for a “China-plus-one” as they explore other countries for setting up manufacturing units, the focus is going to be more on ESG — environment, social issues and governance — more than they look for ease of doing business.
“Companies are now talking of ESG — environment, social issues and governance. I think India as a nation has to look at the ESG factor more as it tries to attract global companies into India,” he said.
“In the US, companies are looking for China-plus-one strategy. US companies will not leave China. But they will also not start manufacturing in China for the rest of the world,” he said. “They will look for alternative sites. So we will see a balkanisation of the global order in manufacturing. And India has the potential to become a hub for that manufacturing.”
He also said that in the upcoming finance budget for 2021-2022, Finance Minister Nirmala Sitharaman should focus on attracting a large number of institutional capital into India from the US.
“We can somehow have the US insurance companies come in and have majority control, then that can bring in a substantial amount (into India),” he said.
Also read: Bihar isn’t ‘ruined’ by agri reform. This ‘branded underwear theory’ from 2010 shows why
If US still aspire to be a world leader then their time is running fast in another 8 to 10 years China will take over US and become the biggest economy of world. US & India should work together on trade, innovation, science and solution which mankind and planet face more quicker than ever.
This Quad will not even crawl if Khalistanis and ISI shenanigans are given free run in US and 5 eyes. This precisely the reason Indians cannot commit fully …China and Russia dont do this double speak.
The restrictions on Walmart etc on purchasing from farmers was on account of FDI policy and not on any other law. Pepsico and other multinationals have been undertaking contract farming earlier.
Private entities could purchase agri produce either directly or on the commodity exchanges.