‘Increasing protectionism will hurt India’

India should not turn protectionist if it wants to continue attracting foreign investments and remain part of existing supply chains, says Dutch Ambassador to India Marten van den Berg. In an interview with BusinessLine, he talks about how India and the Netherlands were cooperating in areas of trade, investment and science to deal with the Covid-19 crisis. Excerpts:

Since everyone has been faced with lockdown, it will result in supply distortions. We were working closely with the Indian government (during the lockdown) to help companies to keep manufacturing processes running, especially in important areas. What we are now looking for is accelerating certain processes. We were having discussions with the Indian government in areas such as healthcare, water and energy where we can facilitate investments.

Dutch companies in India see negative impact on the demand size. But they are in India for a long term relationship. Companies such as Shell and Philips have been here for a long time. Even with the economy contracting, many of them are looking at the possibility to expand investment. That is very important. We do have discussions on how we can facilitate the investments and also on the reforms that are needed. To promote bilateral investment and trade, it is important that markets remain open and that we don’t increase protectionism.

There is also a big discussion going on in re-shoring of supply chains in both private and public sector. Supply chains must be driven by cost efficiencies. We have had close discussions with Dutch companies in India. They are assessing their supply chains. If there is a risk in supply, companies might re-organise the supply chain.

It is important that protectionist policies don’t increase, either through increasing tariffs or FDI restrictions. Because supply chains follow a rational process, if you increase protectionism you will have to pay a price for it. A country needs to address the issue of security of supply with global or regional supply chains and not national supply chain. It shouldn’t nationalise its supply chains.

Economies are contracting in Europe and also in the Netherlands where we might have a 4-7 per cent contraction. India, too, is heavily impacted by the pandemic. At the same time, the challenges that we face in health, sustainability and inclusiveness are more relevant than ever. We are having discussions with specific Ministries, like agriculture, on how to accelerate investment and trade.

We can facilitate achievement of India’s goal of doubling farmers income and also help it become a more sustainable agriculture producer. For example, India has a lot of residual farm production as it is very difficult for it to export because many countries don’t allow residues of chemicals in vegetables and fruits. In the EU, India has issues with rice and grapes. Either Indian farmers must stop using chemical fertilisers or use just less quantities. So we are working with India not only to increase productivity but also sustainability which makes exports much easier.

While India is extremely ambitious on renewable energy, with a focus on solar, it is still looking to coal as a energy source. It is very important to phase out fossil fuels. We have the opportunity to work very closely on one hand to phase out fossil fuels, at least coal, which is very polluting, but also to increase use of renewables. There are opportunities also in off shore wind where Dutch companies are working with Indian counterparts.

Health is another important area and we are working to bring health to remote areas. Philips, for instance, is working with the Indian government at State and national levels to make digital health more affordable and available to large group of people in India.