BS Opinion wrap: India must harness its untapped services trade potential

From services trade trends and POSH gaps in IT firms to rupee volatility, labour reforms, and Arctic geopolitics, here are the key insights from today's Business Standard Opinion page

Hello and welcome to Best of BS Opinion, our daily wrap of the day's Opinion page. 

 

Our first editorial argues that the traditional gravity model of trade is weakening as services become less constrained by distance. Modern services such as IT, finance and business support now dominate, aided by digital platforms and remote work. While services trade is expanding faster than goods, regulatory and structural barriers are replacing tariffs as key constraints. India has emerged as a major beneficiary, with strong export growth and rising global share, supported by talent and Global Capability Centres. Yet dependence on advanced markets poses risks. The piece urges investment in high-end services, regulatory reform, and diversification, while maintaining focus on merchandise exports for employment.

 

 

Today's second editorial examines troubling harassment allegations at a large IT firm to highlight systemic gaps in workplace safety. Despite a robust legal framework under the POSH Act, the piece argues that formal compliance often masks weak enforcement and underreporting. Rising complaint numbers suggest greater awareness, yet many large firms report implausibly few cases, pointing to a culture of silence. Women face significant personal and professional risks in reporting misconduct, especially where internal mechanisms lack credibility. The editorial contends that lasting change depends less on rules and more on organisational culture, leadership accountability, and consistent enforcement of standards.

 

In his column, Janak Raj makes the point that India cannot rely on a freely floating exchange rate as capital flows, rather than trade, increasingly drive currency movements. The rupee’s recent volatility reflects global sentiment, oil prices, and portfolio outflows, which can trigger self-reinforcing depreciation. Historical episodes show that pure free floats often lead to instability, prompting most central banks to intervene. For India, shallow forex markets, high import dependence, and volatile capital flows make a free float impractical. The column advocates managed intervention alongside structural reforms, including deeper onshore hedging markets, easier access for investors, and a shift towards more stable foreign direct investment.

 

Manish Sabharwal and Jayashri Patil argue that legacy institutions such as the EPFO and ESIC are constraining formal employment through flawed design and weak governance. Drawing on historical lessons about unintended policy consequences, the column contends that poor coverage, high costs, and low user satisfaction undermine both employer participation and employee welfare. Limited portability, inefficient technology, and excessive administrative charges further erode credibility. The authors propose radical reforms, including greater choice, Aadhaar-linked portability, lower costs, and private sector competition. They conclude that modernising social security could unlock millions of formal jobs, while improving outcomes for both employers, and employees.

 

Shyam Saran reviews Polar War: Submarines, Spies, and the Struggle for Power in a Melting Arctic by Kenneth R. Rosen as a sobering account of climate change overshadowed by strategic rivalry. The book traces how melting ice has transformed the Arctic into a theatre of geopolitical contest, with Russia and China challenging western interests. It argues that environmental concerns are increasingly subordinated to military and commercial priorities. While rich in detail, the narrative shifts unevenly from ecological alarm to security focus. Saran contends that this imbalance reflects a broader global failure to prioritise climate risks over short-term strategic competition.