NL Corresspondent
Moody's Investors Service said India is likely continue to face challenges in raising longer-term growth potential and creating enough jobs for its young population in the absence of higher trade openness. In its report on South Asia sovereigns, Moody's said compared with other South Asian economies, India appears to be in a better position to deepen its integration in global value chains, attract FDI and increase exports.
The country has better macroeconomic fundamentals, more stable politics and a more developed export sector. “Even so, India will likely face significant challenges in becoming more export-oriented. It will require the government to implement reforms to increase the country's export competitiveness, which may also be politically difficult. “For example, that would involve reducing protection of businesses that have benefited from decades of restrictive domestic trade policies, which have kept out foreign competition,” Moody's said.
India's recent policy choices have continued to constrain its ability to become more export-oriented, said the report titled ‘Low trade openness fuels vulnerability to shocks and curbs growth in the longer run'.
