Doubts surface about Narendra Modi after WTO trade deal scuppered

Aug 02 2014, 08:53 IST
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The failure to sign the WTO agreement undermines the very image Narendra Modi is trying to send about India, the US said on Friday. The failure to sign the WTO agreement undermines the very image Narendra Modi is trying to send about India, the US said on Friday.
SummaryPotential investors are now scratching their heads after Modi govt walked away from major trade deal.

India's Prime Minister Narendra Modi came to office with a reputation as a business-friendly leader ready to open up one of the world's biggest markets and sweep away the remnants of the country's socialist past.

Now potential investors, some of them foreign firms hoping to exploit new opportunities in India's vast consumer market, are scratching their heads after Modi's party walked away from a major deal to reform customs rules and make global trade easier.

India shocked trade officials by rejecting the agreement at the 160-member World Trade Organization, one of the group's biggest initiatives since it was set up 19 years ago.

New Delhi has since said it did not believe the pact was dead, but insisted that, alongside the so-called trade facilitation agreement, the WTO must find a deal allowing India to subsidise and stockpile food in order to protect the poor.

U.S. Secretary of State John Kerry, visiting New Delhi for an annual strategic dialogue between the world's largest democracies, told Modi on Friday that by blocking the trade pact, he was sending negative signals.

"The failure to sign the (WTO) agreement undermined the very image Modi is trying to send about India," a U.S. State Department official quoted Kerry as telling the 63-year-old in a meeting otherwise described as "strong and positive."

It was a rare veto from India, a country that has long espoused the cause of global trade reform, and was one that observers said could be wielded more often as the Modi administration sticks to its nationalist roots.

Whether in foreign affairs or trade, Modi will pursue an "India-first policy" in a way Congress governments that ruled for most of India's independence did not, senior members of his party said, apparently unfazed by global criticism.

"We will not compromise on national interest," said Jayant Sinha, a lawmaker from the ruling Bharatiya Janata Party (BJP).

"That is the way (a previous BJP-led) government operated between 1998 and 2004 and this is how this government will operate," he told Reuters.


The BJP has described that period as "Shining India", when it carried out nuclear tests and declared the country a nuclear-armed state, in the face of international condemnation.

By twinning a trade deal with food security, the BJP may also have an eye on India's vast rural community comprising more than two-thirds of the country's 1.2 billion people, among whom the support system is generally popular.

Coming from Modi, who fashioned himself more as a

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