Why keeping tabs on Tata suggests O’Connor should be quickening the pace in push for an FTA with India

Among the many issues related to the performance of the export sector and how the Government might further help it is the case for negotiating a  trade deal with India.

Australia has secured a free trade deal with  what  is  the  planet’s  fifth-biggest economy.

In contrast, Agriculture and Trade Minister Damien O’Connor says concluding a free trade agreement between NZ and India “is not a realistic short-term prospect”.

Intensive negotiations were held between India and NZ in the context of the Regional Comprehensive Economic Partnership FTA negotiations, especially in 2018 and 2019, before India withdrew from the RCEP negotiations in November 2019.

“RCEP contains provisions enabling expedited accession by India should it wish to re-join RCEP at some point in the future, says O’Connor.  

In the meantime NZ and India continued to work together to strengthen their broader bilateral relationship, he says.

But why  should  NZ be  missing  out on getting something like Australia’s deal?

The  world economic outlook  is  changing, the pace of development in India is quickening and the extent of our dependence on China is being questioned  This gives a fresh urgency to securing a  deal with Delhi, even  if it  were  not  as  comprehensive  as  NZ  would like.

Just look at  what is  happening  in India.

According to  The Economist, there  is  a  staggering  $90bn investment  surge   by  India’s  biggest  business,  Tata.

The Economist  says Tata’s ambition  to  create electronics  factories  and  semiconductor fabrication plant in India could transform  its  economy.

“The  change  in  strategy also reflects the dramatic psychological shift  within the  world’s  most ardent globalisers as  they adapt  to new  megatrends. These  include  the  rebasing of  strategic  manufacturing  away  from  China, the  rise  of  a  new  energy  system, and  industrial policy,  which  in  India is  being  championed by Prime Minister  Narendra Modi.

“Anyone  who follows  India, the  world’s fastest-growing  big economy may be under the  impression  it is  run by Mukesh Ambani and  Gautam Adani, two  swaggering  tycoons, whose conglomerates generate  headlines and make them Asia’s richest men. Together the ‘two A’s’ may  spend  over  $100bn in  the  next   five years. Yet Tata is in fact the  country’s biggest business measured  by market value ($269bn) and  operating profits ($16bn last year), spanning  everything  from steel mills  to  software”.

The Economist estimates  that  Tata’s new plans are larger  than  any other individual firm’s, encompassing  electric  vehicles, electronics, battery gigafactories,  clean power  and  chips.

“If  that doesn’t  sound ambitious  enough, it has  also taken  on the  Everest of corporate turnarounds, buying Air  India.

 “The  firm’s  scale, reputation and record make it one of the world’s most important  companies.With 800-900m customers across ten  business lines, it  employs  almost 100m people, more than any  listed firm anywhere bar Amazon  and  Walmart….

“When blue-chip multinationals  head to  India —not  just Apple (reportedly) but  everyone from Starbucks  to Zara—they seek to team up with Tata, the  one  firm you can really  trust.

“To understand  where Tata and India  are  heading in the 2020s and 2030s, you have to  back in time.  The company has stayed alive by adapting to technological and political change…If  you  want  to  glimpse the  frontier  of Indian capitalism, take a trip to Tamil Nadu in the  south of the  country.

“New factories  with solar panels on their  roofs  lie on  a  vast 220-hectare site. Inside, it is  reported  Tata is making components for the latest iPhones on behalf of  Apple—and  in the process finally connecting India to the  world’s  most sophisticated  supply  chain which used to be anchored  to China.”

As  Point  Order  sees  it, this is  key  to  why NZ  should be  working harder to connect more  closely to India.

Already  there is  concern  that  NZ is  too dependent on the Chinese  market.  What  happens  if  it  were to close overnight if  it attacked  Taiwan  and  war  broke  out, let’s say?

In  any case   shouldn’t NZ already be  trying to match  Australia and  build  its  trade  from the  paltry $2bn  a  year currently?

Certainly the  red meat sector would benefit from a free trade agreement between NZ and India.

One  trade  expert points  out  the  deal between Australia and  India cuts tariffs on a range of Australian exports to India, including sheepmeat, wool and lobsters. It also includes a phased reduction of tariffs on wine and a host of other agricultural products including avocados, nuts, cherries and other fruits.

A Meat Industry Association spokesperson was  quoted  as  saying it was frustrating Australia had beaten NZ to the multi-billion dollar Indian market.

“India is a big market. It’s a diverse market and I think a lot of what New Zealand produces complements India’s consumers, particularly for the red meat sector. India as a market has huge potential”.

One puzzle  is why our Opposition parties  have been seemingly as  indifferent  as  the government has  been  to the  opportunity in India and to the  need to secure  an alternative to China on which  NZ has  become heavily dependent.  National  used  to pride  itself  on how  it  fostered NZ’s  regional  economies.

Another good reason for NZ to look to India is  that it  could  be  a  source  of  the  skills  this  country  desperately needs, particularly in the  hi-tech  field.

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