Question

responses this discusion must be of at least 150 words

International Trade & Globalization: India

            One of the most important developing economies in the world is India. Located in South Asia, it is a regional powerhouse with emerging interests and economic ties around the world. It’s most prominent ties are with China who is the holder of their largest trade debt. According to an article published by the times of India, the India-China bilateral trade reached 84.44 billion last year. Although there was about a forty percent increase of Indian exports to China in 2017 totaling to about 16.34 billion based on data from the Chinese General Administration of Customs. Altogether India’s exports to China has increased, specifically diamonds, copper, iron ore, organic chemicals, and cotton yarn has contributed to the increase in exports to China but this is not enough. India has been urging China to ease access to their Information Technology and Pharmaceutical sectors to allow Indian firms to do business and further help offset their huge trade deficit.

            To compare and contrast these two economic powerhouses they both hold comparative advantages over one another but speaking more on the Pharmaceutical sector, it has been India’s pride and a source of economic strength in China-India relations. In an article titled “#4 sectors In Which India is Surging Ahead of China” pharmaceuticals was on that short list with the article citing that back in 2017 over the course the last five years India has dominated in pharmaceutical production and exports. To Latin America they exported products worth 651 million, compared to China’s 404 million valued exports, stated by the IBEF (Indian Brand Equity Foundation) report. India is clearly more competitive in this sector and holds a global advantage over China in terms of exports however since those exports are not reaching Chinese markets which boasts a population of more than 1.3 billion which a little over India’s own, this is a negative for India’s international trade as their products are being excluded from a vast market where there is plenty of wealth to made for Indian pharmaceutical firms.

            By blocking Indian pharmaceutical exports one could argue that this is a primary motivator for why China has dragging its feet on their guarantees to allow Indian Firms access to their vast pharmaceutical markets. They are not competitive in this sector compared to India and therefore are trying to protect their pharmaceutical industry by blocking others from entering the market. A study put out of by the World Health Organization in 2017 titled, “China policies to promote local production of pharmaceutical products and protect public health” demonstrates there are more factors involved that is causing this protectionist outlook. The study discusses how the country is a major exporter of pharmaceuticals because of higher priced home patent drugs and spends a significant portion of its medicines budget on imported products. Also, growth in this sector has slowed for almost two years as a result of heavy government regulation and involvement. The overall goals of the Chinese government is to promote national health by increasing access to quality, less expensive pharmaceuticals, cutting dependence on foreign medicine and to bolster domestic production.

            Overall, India boosting trade surpluses with many regions and countries around the globe. However, the holder of its biggest debt is always a barrier to true economic success. China’s inaction on allowing Indian Firms to enter their pharmaceutical market will always be a barrier to offsetting that debt which increased 18 percent last year alone. Since the opening of the Indian economy in 1991 globalization has allowed the economy to grow at an average of 6-7% per year allowing it surpass China to become the fastest growing economy in 2015 and again in 2018. Foreign Trade has played a large role in that and will only continue as India plays to its economic strengths and ramps up its exports to cement its position as a global economic powerhouse.

Answer 1

India and China are the countries who not only compete with each other in international market, but also cooperate with each other by signing bilateral trade agreements. Indian pharmaceutical companies can have the lucrative market in the country of China, but India is itself a big domestic market that is being catered by the Foreign MNCs. So, there is a need for the Indian MNCs to move up the ladder in the value chain in the pharmaceutical sector with superior quality and competitive pricing. It will help India to negotiate an opening for Indian Pharmaceutical companies to operate in Chinese market. In return, the Chinese companies can be granted the access where the MNCs from other countries are operating. Besides, the Indian pharmaceutical companies can increase their presence in other neighbor countries to stake a claim to enter in the market of China. Besides, there is also a scope of work for the Indian IT companies to offer value added products and services to the market of China. But to release it, it is important for these two companies to operate as joint trade partners rather two different exporters, competing with each other for the same market.