PLUSES & MINUSES. Our Ambassadors should talk business

In spite of an ambitious target of $900 billion by 2020, India’s exports have been falling for the past one year. The future is also uncertain, despite the hectic efforts being made by the government.

Various factors are responsible for this crisis, including the downturn in India’s traditional markets in the developed world, lack of business preparedness, comparatively high costs of manufacturing, among others.

Are the efforts being made sufficient? Much more needs to be done than what we are doing. One way forward is to ratchet our economic diplomacy efforts in the developing world to tap the demand, even though the volumes will not be as big as we have witnessed so far.

In June, while speaking to probationers of the 2013 batch of Indian Foreign Service, Prime Minister Narendra Modi asserted that the our diplomats will need to focus on economic diplomacy to ensure higher share of international trade and attract investment for the success of Make in India. “Become catalytic agents, focus on trade,” he said.

India’s diplomatic corps limit themselves to political diplomacy which has been their leitmotif. Many do not appreciate the need to promote business interests.

This is not to say that our diplomats have not been practising economic or commercial diplomacy but much more needs to be done. At CUTS, we have captured some very good case studies and future strategies under a publication: Economic Diplomacy: India’s Experience .

One remarkable case of economic diplomacy is worthy of description here so that it can serve as a beacon to all our diplomats, young and not so old. This involves the pharma sector, one of the biggest strengths of India’s economy with its huge export potential and unlimited demand.

Argentina has been keeping out imports of India’s pharma goods since long through a 25-year-old law. India’s ambassador, Amarendra Khatua, worked on it through several layers of the government to get it upturned in 2014.

This helped the Indian pharma industry reach the Latin American country through medicines that were cheaper than what they had been importing from the developed world.

Argentina is the third largest pharma market in Latin America, after Mexico and Brazil. Its annual import bill is more than $2 billion of which India had less than one per cent share.

This too was not finished goods but fine chemicals and raw materials. Few critical medicines too featured in the list, but were cleared after vigorous inspections by the regulatory authority: ANMAT.

The market is dominated by multinationals from the US, EU and Switzerland. The local pharma trade too colludes with the multinationals in keeping away cheaper medicines from India and similar sources, in view of higher margins.

Over a period of three years, Khatua lobbied the health ministry, ANMAT, major laboratories involved in the testing and certification and a host of others to convince them to open the market to Indian pharma, and succeeded.

In the run-up to this, he had strategically aligned with former health ministers and ex-chairs of the regulatory body to build up a momentum.

He also met with almost about 30 state and private laboratories to assure them that their profits would not be affected and that India was willing to share technology and invest in local partnership, thus supplanting their efforts and not shutting them down.

Argentina being a federal country, Khatua also lobbied with all the 23 provincial governors to convince them to bring pressure on the federal government to open up the market to India by changing the law.

According to Khatua, the approach was to request Argentina to consider inclusion of India on the basis of quality and prices, and to take into account Indo-Argentine friendship and goodwill, and to plan for long-term cooperation in the sector.

Not resting with the groundswell of support, he organised a visit of the Argentine health minister to India to powwow with the commerce ministry, Pharmexcil and trade and industry players in September, 2014, with some important agenda.

The list of agenda included: immediate import of generic and essential drugs, vaccines, etc. from India to bring down the rising prices in the Argentine market; preparing a list of drugs and medicines for which Indian suppliers can participate in single tenders; working with ANLAB, a body of the government of Argentina, on joint ventures for local manufacturing, technology transfer and export of drugs and medicines to Argentina; and increasing collaboration between Indian pharma manufacturers and the Argentinian public and private laboratories.

Soon after this dialogue, India’s mission in Buenos Aires organised a visit of 40 Indian pharma businesses for a road show and talks with the Argentine health ministry, public and private laboratories, ANMAT, ANLAB and provincial governments.

Following all this hectic activity, the grounds were laid to raise our exports to an unpenetrated market in Latin America. Khatua feels that with proper coordination, India could reach a target of $15-20 million in the next 2-3 years.

The turnover can also be more as Argentina feeds neighbouring countries such as Uruguay, Paraguay, Ecuador, Bolivia and Peru, and perhaps using their free trade agreement under the MERCOSUR regional bloc.

This story shows that diplomats have to roll up their sleeves in foreign countries to catalyse trade relations and work at all possible levels, rather than just one point to get better market access and thus ensure the success of Make in India.

The writer is the secretary-general of CUTS International

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