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Home / Business

Richard Prebble: Making a trade deal with India - the time to start is now

Richard Prebble
By Richard Prebble
NZ Herald·
7 Nov, 2023 04:00 PM5 mins to read

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People throng a marketplace in Mumbai earlier this year. India is now the world’s most populous country, with more than 1.4 billion people. Photo / AP

People throng a marketplace in Mumbai earlier this year. India is now the world’s most populous country, with more than 1.4 billion people. Photo / AP

Richard Prebble
Opinion by Richard Prebble
Richard Prebble is a former Labour Party minister and Act Party leader.
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OPINION

Christopher Luxon has pledged to achieve a free trade agreement with India. Last week in India, I assessed the prospects of such a deal.

At Mumbai Airport, the immigration officer asked me: “Have you visited India before?”

“Yes,” I replied, “45 years ago.”

He was visibly astonished.

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It was then my turn to be astonished: Mumbai Airport is a modern engineering marvel. Forty-five years ago, New Delhi Airport was total chaos. Today, my visitor experience at Mumbai Airport was so much better than at Auckland Airport.

The Mumbai traffic, in a city of 23 million, moved faster along elevated highways to my hotel than my journey through gridlocked traffic to Auckland’s airport. Mumbai has a prosperous middle class.

Everywhere one looks, there is a high-rise building under construction. As I did not visit the slums, I have seen more homeless people on the streets of Rotorua than I saw in Mumbai.

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I did see a young girl who was hawking fridge magnets, just a step up from begging, produce a smartphone from her shirt. Just as markets are elevating people from poverty, India’s telecom industry is eliminating the so-called digital divide.

The estimated 1 billion Indians with a smartphone have access to more information than the US President had in 1980.

The Indian Government has a programme to open a digital bank account for every household. In New Zealand, government red tape has made it so hard to open an account that Westpac estimates 60,000 New Zealanders are unbanked.

Since liberalisation in the 1990s, the potential of the country with the world’s largest population has been unleashed. India’s economy is already the fifth-largest in the world, bigger than the UK, and the ratings agencies predict it will grow at 9 per cent a year.

Growth means higher emissions. The only newspaper article on climate change I read bemoaned the fact the developed world is reneging on the promise of US$100 billion ($1.67b) annually to assist developing countries decarbonise.

The article claimed that even if all the money went to India, it would not be enough to fund that country’s switch from coal.

A few days in India was long enough to realise that it is determined to become a developed nation. The world’s strategy of fighting climate change by restricting economic growth will fail. The answer to climate change must be technology. The world could start by assisting India to switch from coal to safe, carbon-free nuclear energy.

It is also obvious that trade with India is the way to reduce our dependence on China.

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In 2011, John Key launched the NZ Inc India Strategy, a plan for India to become a core trade, economic and political partner for New Zealand. Key led a high-level trade delegation to India.

John and Bronagh Key were welcomed to India by former Indian Prime Minister Manmohan Singh and his wife Gursharan Kaur. Photo /  NZPA
John and Bronagh Key were welcomed to India by former Indian Prime Minister Manmohan Singh and his wife Gursharan Kaur. Photo / NZPA

Jacinda Ardern never visited India, and Labour’s Foreign Minister waited until this year to visit. New Zealand locking out Indian students and residents during Covid was not well-received by the Indian Government. Under Labour, New Zealand did not join the Quad, an alliance of India, Japan, Australia and the US.

Under Labour, there was zero chance of signing a free trade agreement with India. It will be very challenging for Luxon, too.

Australia worked very hard under successive governments for its free trade agreement, signed last year. Australian Prime Minister Anthony Albanese has visited India twice this year. Despite Australia’s efforts, their trade agreement excludes milk products.

India has 12 times more dairy cows than New Zealand. India’s farmers are a powerful voting group. We will not achieve a free trade agreement that covers milk, but our trade is more than dairy. An agreement that lowers India’s high tariffs must assist two-way trade.

Mumbai has a prosperous middle class. Photo / AP
Mumbai has a prosperous middle class. Photo / AP

India is a rising power that we have neglected. The Indian consul has recommended that we work on establishing personal relations. This is good advice.

Forty-five years ago, when I visited New Delhi, I did so in response to a personal invitation from the Speaker of the Indian Parliament. At a meeting of Commonwealth MPs to elect a new chair of the Commonwealth Parliamentary Association, our Government recommended that I support a former Canadian provincial premier.

I made my own decision. The Speaker of the world’s largest democracy was a better choice. I was the only MP from the old Commonwealth to vote for the Indian Speaker.

The vote was a humiliation for India. The Speaker, grateful for my support, insisted that I visit the Indian Parliament. He hosted a reception for me, a junior backbench MP, where I met politicians who represented more voters than the population of New Zealand.

Personal relationships do matter. New Zealand has a lot of catching up to do before India becomes a core trade, economic and political partner. It will take time to achieve, so the sooner we start the better.

Richard Prebble is a former leader of the Act Party and a former member of the Labour Party.

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