Indian Prime Minister Narendra Modi often speaks of “trusted” supply chains. At the G-20 last year, he said that global supply chains depend upon “trust, transparency, and timeframes”; he’s made a similar pitch for Japan, the United States and Australia to “trust” India as a trade partner.
And he’s right: The only chance that countries such as India have to entice value chains away from China is by focusing on resilience and reliability.
Yet the actions of Modi’s government are severely undermining his argument.
India has responded to rising global commodity prices by unexpectedly blocking exports of sugar and wheat; some expect rice to be next.
These are products in which India plays a major role in global markets; the country is the world’s second-largest exporter of sugar and the second-largest producer of wheat. World prices for wheat rose 6% on news of India’s export ban.
True, for India, food prices are of particular importance. It’s one of the few countries in the world in which food products comprise more than half the consumer price index. If you don’t control food prices, you risk inflation expectations spiraling out of control and years of macroeconomic instability.
These are products in which India plays a major role in global markets; the country is the world’s second-largest exporter of sugar and the second-largest producer of wheat. World prices for wheat rose 6% on news of India’s export ban.
True, for India, food prices are of particular importance. It’s one of the few countries in the world in which food products comprise more than half the consumer price index. If you don’t control food prices, you risk inflation expectations spiraling out of control and years of macroeconomic instability.
Source: The Economic Times
