MFN Trade Benefits for India: ADB Economist's View
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According to Asian Development Bank (ADB) chief economist Albert Park, India's proposed trade liberalization, including tariff reductions with the US, could benefit the nation if implemented on a Most Favored Nation (MFN) basis. He highlighted that India needs regulatory reforms and infrastructure upgrades to attract foreign investment and capitalize on supply chain diversification opportunities.

Park has previously stated that India needs to further liberalize its foreign direct investment (FDI) policy and open up trade to achieve its goal of becoming a developed nation by 2047. He observed a perception that India hasn't fully embraced import liberalization, with reasonably high tariffs on several inputs, causing complaints from exporting sectors about accessing cheaply priced inputs. Despite this, Park acknowledged India's advantage as a large and rapidly growing economy and market.

Furthermore, Park noted that India is benefiting from the 'China plus one' sentiment. To capitalize on this, he suggested that India needs to create an investment-friendly environment by reducing red tape, improving infrastructure and logistics, and implementing deregulation.

While the ADB revised India's GDP growth forecast for FY26 downwards to 6.7% from 7% due to potential risks from US tariff levies, it also noted that a trade agreement between India and the US could mitigate these risks. The ADB recommended that countries should negotiate to ease tensions and reduce tariffs, and that developing Asian economies should remain committed to open trade and investment. This includes bolstering economic integration, reconfiguring supply chains to adapt to new tariffs, and seeking new trade agreements.

The think tank GTRI (Global Trade Research Initiative) has advised India to maintain strategic autonomy while engaging with both China and the US, prioritizing economic interests and global trade principles, regardless of external pressures. GTRI suggests that India should not be drawn into geopolitical rivalries. While the US remained India's largest trading partner in 2024-25, India's trade deficit with China widened during the same period.


Writer - Kavya Reddy
Kavya Reddy is a dynamic journalist with a passion for uncovering compelling stories and a keen interest in sports. She brings a fresh perspective and a commitment to accurate, impactful reporting. Kavya is particularly interested in socio-economic issues and local community narratives, eager to use her skills to shed light on underreported topics and give a voice to diverse perspectives, all while staying connected to her love for sports.
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