Sunday, Dec 21, 2014

Commerce, MEA merger to leverage trade diplomacy

By: ENS Economic Bureau | New Delhi | Posted: May 27, 2014 12:48 am

Trade is likely to be the central agenda for India’s diplomacy under Prime Minister Narendra Modi. Amid speculations that the commerce ministry may be merged with the ministry of external affairs, already there are indications that it’s trade that will be the thrust area when it comes to diplomatic relations. The commerce ministry is likely to be headed by a minister of state with independent charge, reflecting the thinking within the new government.

A senior official told The Indian Express that “now it may be possible to post the trade ministry officials in Indian missions abroad,” a proposal which has been lying for some time now due to bureaucratic turf war. The commerce ministry had proposed creation of over 30 new commercial counsellor posts in Indian missions abroad and place them in a separate cadre.

However, the ministry of external affairs has been reportedly opposing the move. The new government faces the challenge of addressing declining exports and it will be immediately tasked with framing the Foreign Trade Policy (FTP) 2014-19. While the FTP will look at expansion in newer markets for boosting exports, diplomacy can provide the push to further increase it. Exports grew just 5.26 per cent to $25.63 billion in April FY15.

Earlier, during his election campaign, Modi had often spoken about reaping benefits of trade diplomacy. “It seems… our overseas missions’ primary task is to file long reports … to gather information about their host country, write political and security analyses about the country’s old friends and new. These dispatches are sent to headquarters, where they are read by the relevant division. While such procedures were justified in a previous day and age, in the 21st century, both foreign policy and the foreign office needed to change direction,” Modi had said in March.

While there have been murmurs that the discord between the two departments did have an adverse impact on trade and economic growth, there are also voices which argue that the two have heavy agendas to work on and thus it is “not feasible to merge two such big departments”.

A former commerce secretary said, “World over, all major countries have separate departments for the two as both of them entail different kind of engagements. However, one can argue that better coordination is required between the two, it is work-in-progress.”

Further, India is currently negotiating free trade agreements including Regional Comprehensive Economic Partnership (RCEP) between Asean member nations and Australia, China, Japan, Korea and New Zealand. Another work in progress is the FTA with the European Union. Better coordination between the two departments is important for India to boost its economy and gain global space.

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