India needs to return to more liberal trade regime: Arvind Panagariya

India needs to return to a very liberal trade regime as it can push growth into double-digit range, former Niti Aayog Vice-Chairman Arvind Panagariya said.

With a low corporate profit tax rate, labour law reforms, GST, and bankruptcy law, a massive privatization programme on the anvil, and measures to de-stress the financial sector under way, the country is poised to take on to global markets in a major way, he said.

"But this requires one additional key ingredient: a more liberal trade regime, he said while addressing the 36th Commencement Day Annual Lecture organised by Exim Bank of India (Exim Bank).

He was speaking on the topic - India's Trade Policy- past, present and future.

Panagariya, who is currently a Professor of Economics at Columbia University, said a more liberal trade regime carries the promise of pushing this growth rate into double-digit range.

He said one avenue for liberalising trade is by lowering tariffs against all trading partners, which the country successfully deployed from 1991-92 to 2007-08.

The second approach can be by entering into free trade agreements with major trading partners, he said.

"A good starting point for this would be the United Kingdom and European Union. These are large markets and their agricultural sectors pose no threat to the livelihood of India's farmers, he said.

Panagariya said, at present, 42.5 per cent of the country's workforce is employed in agriculture, and for rapid transformation, nearly half of this workforce must move to industry and services in the next ten to fifteen years.

This in turn requires the creation of a large number of jobs in industry and services at the lower-end of the skill spectrum that pay attractive wages, he said.

According to him, the only way to accomplish this is by creating an environment in which successful export-oriented firms can emerge and flourish in labour-intensive sectors such as apparel, footwear, furniture, toys, kitchenware and stationery among others.

Success in export markets requires first and foremost an open trade regime, he said adding that rather than raising tariffs, the country must lower them.