Modi must communicate policy reversals

The appointment of Gajendra Chauhan as chairman of the Film and Television Institute of India, if the protesting students’ concerns are valid, is contrary to the Bharatiya Janata Party’s pledge in the education section of its election manifesto, which states: “The procedures to make appointments to senior positions shall be made transparent and merit and ability shall be the sole criterion.” In other institutions too, such as the Indian Council for Historical Research, the BJP has installed party supporters and sympathisers, disregarding its own avowed deciding factors.

But this is in keeping with a broader trend. The wide-ranging reviews of Prime Minister Narendra Modi’s achievements during his 365 days in office must therefore be viewed against some of his pre-election promises and declarations soon after coming to power. When viewed thus, the government’s actions seem inconsistent, especially the absence of proper disclosure and communications.

An example is the blocking of the passage of Trade Facilitation Agreement (TFA) in the World Trade Organisation (WTO)—one of the first policy actions taken in July 2014 by the Modi government, it shocked India’s trade partners, especially western economies. The Indian government did have its reasons: the actions of the WTO leadership and rich countries had aroused suspicions that they would go back on the Bali agreement—especially on food security clauses—as soon as the TFA was passed.

But the din of faux indignation in the western media drowned out any rational examination of India’s position. The Indian government also failed to communicate its stand to the global audience. What further complicated matters was that India stood alone in the WTO; all the emerging, developing, or poor countries, considered traditional allies, abandoned India. A rationale emerged later—on 5 August 2014—when Commerce Minister Nirmala Sitharaman made a statement in Parliament.

In November 2014, at the India-US Trade Policy Forum meeting, Sitharaman and US Trade Representative (USTR) Michael Froman, signed an agreement on food security and the TFA, thereby ending a deadlock. This was made possible after Prime Minister Modi’s meeting with U.S. President Barack Obama. What transpired at the Trade Policy Forum, or the conditions agreed between Sitharaman and Froman, is not known.

An anodyne communique issued after the meeting noted: “Minister Sitharaman and Ambassador Froman expressed satisfaction at the recent understanding between India and the United States on the issue of public stockholding for food security purposes and the Trade Facilitation Agreement…They committed to working with other WTO Members to ensure that the WTO General Council takes this understanding forward towards a satisfactory outcome.”

Although Sitharaman did subsequently make a statement to Parliament outlining the gains wrested from the U.S., it stopped short of revealing India’s give-aways to the U.S. No agreement is complete without some give and some take. In this case, Sitharaman chose to highlight only what India had gained. Perhaps the concessions are linked with the next instance of policy backtracking.

On 23 April 2015, Modi made a startling statement. While inaugurating an exhibition organised by the Ministry of Commerce, he announced that India’s intellectual property regime (IPR), specifically its patent laws, should be brought on a par with global standards. Nothing wrong with that except for one minor omission: India’s IPR framework is already fully compliant with WTO rules.

This statement led to speculation that India was capitulating to demands that its domestic patent rules be realigned to comply with U.S. laws. IPR differences have forced India and the U.S. to lock horns over the past few years, especially over India’s refusal to allow pharmaceutical companies to “ever-green” patents, an exercise undertaken to prolong a drug’s patent life by making marginal or superficial modifications.

Once again Sitharaman stepped in to save the day. She defended Modi’s statement in an interview to the media. But the import of Modi’s statement was not lost on observers.

The steady push-back in domestic IPR laws has been in evidence for a while now, despite the government’s evocative and repeated rhetoric that India’s IPR framework is non-negotiable.

One of the revelations came in the USTR’s press release of 12 December 2014. The 2014 edition of Special 301 Report (released in April 2014), a unilateral annual review of the global state of IPR protection and enforcement as defined by the U.S’s laws, stated that the USTR would conduct an out-of-cycle (OCR) review of India’s IPR laws in the fall of 2014; the December press release concluded: “India has made useful commitments in recent months, including to institutionalize high-level engagement on IP issues, to pursue a specific work program and to deepen cooperation and information exchange with the United States on IP-related issues under the U.S.-India Trade Policy Forum.”

Then, in January, Froman’s written statement to the Senate Committee on Finance admitted rather triumphantly: “Use of the out-of-cycle review helped to secure commitments from India in the 2014 Trade Policy Forum on a broad range of IP issues of concerns to the United States and its stakeholders.”

Finally, the 2015 Special 301 report—released a couple of days before Modi’s curious statement—continues to place India in the ‘Priority Watch List’ and might have instigated his utterances. This also gives rise to speculation that India’s gradual acquiescence on IPR laws might have been the sacrifice necessary to get its way in the WTO.

There are other inexplicable policy reversals. On his first official visit to France, in April,2015, Modi announced a decision to buy 36 Rafale aircraft in fly-away conditions. [9] This was at odds with the Indian government’s earlier decision, taken during the UPA-II regime, to purchase 126 Rafale jets. The decision was also an about-turn from the BJP’s election manifesto promise to focus on “technology transfer in defence manufacturing” and its offset policy linking defence procurement with ‘Made in India’. The Indian government’s earlier agreement required jet manufacturer Dassault to undertake partial manufacturing in India. The fly-away condition means all manufacturing will now take place in Europe.

Modi’s snap decision remains a mystery, because it was not clearly communicated to the Indian public. There is a possibility that the Dassault agreement was flawed and required reworking. But the government must inform the public; otherwise such policy reversals make governance look capricious.

Rajrishi Singhal is Senior Geoeconomics Fellow, Gateway House. He has been a senior business journalist, and Executive Editor, The Economic Times, and served as Head, Policy and Research, at a private sector bank.

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