Former RBI Governor Raghuram Rajan has said that India needs to be ‘very careful and clever’ while negotiating trade agreements with the US, especially with regard to the agriculture sector, which is heavily subsidised by developed countries. He said ‘I think where it is much more sort of difficult (trade negotiations) is in areas such as agriculture, where every country subsidises its producers, and our producers may be relatively smaller, may have somewhat lower subsidies--unconstrained flow of agricultural products into the country may create problems for them.’

Noting that the trade tensions are negative for both in terms of exports as well as investment, Former RBI Governor said ‘but you must remember that there are opportunities also in what is happening to the extent that India is perceived as an alternative route to some of the other regions like the United States.’ According to him, if the tariffs imposed by the US on China and some other parts of Asia are much higher than tariffs on India, there may be an opportunity for some manufacturing to flow to India. While pointing out that Indian exports in manufacturing to the United States are not that big, he said any kind of tariffs (on India) will have some modest dampening effect, but not a lot.

He said India’s economic growth has sort of settled in the range of 6-7 per cent, and a fraction of percentage point may be affected by the global trade uncertainties. He said but in the longer term, this would spell opportunity for India.