Foreign competition

Most businesses or service providers specialise in one thing –  teachers who produce education, or workers who produce products, or shopkeepers who bring up the goods we need. But everybody consumes many things every week – food, clothes, soap, cosmetics, electricity, television programmes and more. Sensibly, we consumers want the most for our money, so we encourage efficiency by purchasing the best products and services at the most affordable prices.

Everytime that government bans an imported good, or slaps a tax on an imported good to make it more expensive, it encourages inefficiency in one sector or another. If we create special taxes for foreign sugar, or foreign cloth, or foreign toys, we make consumers pay more, and make consumers subsidize the inefficiency of domestic companies that are not working as efficiently as they could. If you try that for one commodity, you penalise people who consume that Indian consumers will pay far too much for shoddy goods and the country as a whole will grow poorer and poorer without the improving effect of competition.

Instead, our lagging industries need to learn to compete, and that is not too difficult. Already India’s finished garments and IT services and other products are appreciated the world over for quality, efficiency and competitive costs. Globalisation, in the form of World Trade Organisation reforms, are designed to lower foreign tariffs which were originally designed to protect their own inefficient producers from Indian competition. So markets. Where our productivity is strong, the new global trade rules will let us conquer foreign markets. Where our productivity is weak, we need to invest more, harder, and become more efficient at what we do. Considering that overseas Indians are among the most successful and best-respected business communities the world over, we clearly have the talent to succeed right here at home.