Rakesh Mohan about trade and rates: India must act boldly, join Asia-centered block

Copyright © HT Digital Streams Limit all rights reserved. Rakesh Mohan on trade and rates: India must act boldly, join Asia-centered block to remain competitive worldwide Rhik Kundu 5 min Read 27 Aug 2025, 11:33 am Ist Dr Rakesh Mohan’s broader message was that India stands at a crossroads: resilient in growth-moment, but vulnerable to external shocks and internal bottles. Summary Dr. Rakesh Mohan calls on India to improve its competitiveness and integrate into regional trading blocks, warning against marginalization amid US rates and a fragmented global trading system. He asks for increased R&D investments and structural reforms in the financing of agriculture and infrastructure. New Delhi: India should actively consider practicing membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to remain competitive in global supply chains, Dr. Rakesh Mohan, a member of the Economic Advisory Council to the Prime Minister, said. The main purpose should be to strengthen the growth potential and competitiveness of the Indian economy and maintain precautions as needed. In an interview with Mint, Dr. Mohan, who serves as President Emeritus and a distinctive fellow of the Center for Social and Economic Progress, warned that India risks marginalization as it still stands outside the regional trading blocks that reform the world trade. With the sidelines of the World Trade Organization amid the ongoing geopolitical and geo-economic rearrangement, the global trading system is fragmented in large regional trading blocks: the European Union, the US-Mexico-Canada group, the regional comprehensive economic partnership and CPTPP in Asia. ‘Vietnam, Thailand and Indonesia are in these groups. Why should we be more careful of China than they are? ‘ He said and noted that Asia (including South Asia) is expected to account for two-thirds of global GDP growth, and thus in the coming decades, increasing demand for goods. “It is surprising that Ireland exports more to China than India does. We can’t afford to put longer out of supply chains,” he added. His remarks come amid a fresh wave of tariff increases by the US, which has increased duties to as high as 50% at about half of India imports. The move threatens to undermine India’s traditional export sectors such as fisheries, gemstones and jewelry, textiles, garments and leather goods. Pharmaceutical products and electronics were spared because it falls outside the scope of “reciprocal” rates, but the labor -intensive industries now exposed have millions of workers employed. Social issue “This is a very serious problem. You are looking at the rise of a major social and labor issue concentrated in some geographical groups,” Dr. Mohan warned. To dampen the blows, he encouraged long -term strategies such as targeted subsidies to protect work and competitiveness, along with the diversification of export markets. ‘… Exporters can’t put on their brackets. They need to adapt quickly to become more competitive and search for new markets, especially in Asia. The government can and should provide support in the current circumstances, but survival is ultimately in private entrepreneurship and initiative, which India is not lacking, ‘he said. Dr Mohan emphasized that India’s structural challenges remain urgent. “Agriculture employs about 45% of the workforce, but only generates 15% of GDP. Dairy value has already been added larger than grain and pulses. The actual growth in the current and future lies in value-added production in dairy, poultry, fisheries, fruits and vegetables. From the current 0.3% to 1% of AgriGDP. Ltd., commonly known as Amul, as a model of the scale of productivity of smallholder farmers and argued that similar cooperative or hybrid structures are needed over perishable products. Manufacturing and labor -intensive exports, together with services, must record surplus labor in an accelerated way, “he said. Dr Mohan has asked for a ‘fresh approach’ to labor reforms, which balance flexibility with credible social security and unemployment benefits. ‘ Over the past few decades, while India has produced 10 million graduates annually, their quality is weak. But too many students don’t even have it, “he said. R&D spending, at 0.7% of GDP, is far behind peers, with investment in the private sector just 0.3%, he said.” This is inexplicable. Without uplifting R&D, whether in agriculture, manufacturing or universities, we cannot compete worldwide, “he added. Dr. Mohan, which reflects on the twin balance skin crisis, when both borrowers and lenders are tense, argued that India should distinguish between commercial viable infrastructure projects such as airports, ports and Yields such as roads or power distribution. We need to rely more on public funding, support for viability and specialized financing institutions such as IIFCL (India Infrastructure Finance Company Ltd) and NBFID (National Bank for Finance Infrastructure and Development), “he said. titlednon-performing assets in Indian banking in the 2010s, co-author of the title of infrastructure and public-private partnership, which underlines how the twin ball dancing crisis emphasizes the deep structural defects in financing. Only, he said, cannot finance infrastructure. We must acknowledge that reality as miracles of the private sector corporate effects for infrastructure is expected, “he added. Test of resilience Dr Mohan’s broader message was that India is on a crossroads: resilient in growth, but vulnerable to external shocks and internal issues. to act boldness. In terms of fiscal policy, Dr. While India’s current account deficit looks manageable, Dr. “The exchange rate remains overvalued for manufacturing, with earnings from exports and services, each about 3% of GDP, which contributes to the maintenance of a modest current account deficit,” he said. Prove. Unless this void is addressed, private investment will remain slow, “he added. Catch all the business news, market news, news reports and latest news updates on live mint. Download the Mint News app to get daily market updates.