9 ms·

India has a law that a seller must source at least 30% of a product from intra-India businesses in order to do business in India. In my opinion, this is a very

• x1798DE 10y ago
  Preventing people from getting inexpensive foreign goods seems like a terrible way to increase the amount of wealth those people have, in my opinion.
  • BonsaiDen 10y ago
    It is actually the other way around. Internal producers simply cannot compete with external ones who can produce in multiple countries, in giant quantities at very low overhead cost and then sell reject goods for a very low price. Africa has a big problem with this. Due to trade agreements, many European meat producers sell their "leftovers" into the African market at extremely low costs, which has lead to the demise of domestic producers of live stock. Which then resulted in a loss of jobs. Yes, some people might be able to purchase things at a lower cost now, but some other people will loose their jobs and won't be able to purchase anything at all, which also negatively affects the domestic market. For the outside producer is not a problem, they simply can move on. But kick starting a domestic market and bringing wages back up again will be huge issue for any government in the long run.
    • gwright 10y ago
      This is a common argument but it always seems to assume that the value of increased sales to specific group of producers is somehow more important than value of the competing goods to the disbursed group of consumers. Specific groups of producers seem to always be able to influence government policies in their favor while the disbursed interests of everyone else get discounted. And just to be clear, I'm not talking specifically about India, this phenomena is common everywhere.
      • gherkin0 10y ago
        There are more factors than just goods and sales though, like the independence and autonomy of the country/community, it's level of infrastructure, social development, etc. Local producers can help with those factors, while foreign producers dumping reject goods won't.
        • gwright 10y ago
          Of course there are other factors. But that doesn't mean the dispersed interest of consumers should be valued at zero just because they don't have a lobbyist and no one donates to a politicians campaign after explaining how they should let Apple sell used iPhones.
• twoodfin 10y ago
  Why would such a law work better economically than trade barriers in general? The net effect in this specific case seems to be an effective tax on the Indian consumer who would be happy with a refurbished iPhone 5S.
  • emodendroket 10y ago
    Many people do not consider trade barriers being bad axiomatic.
• throwaway420 10y ago
  What's a predatory product? That seems silly to me: people only buy something when they value what they get more than what they give up to get it. And how does it remove wealth from a country? Allowing people to satisfy their desires in the most direct way possible doesn't seem in conflict with the goal of creating wealth, so I'm honestly finding it hard to understand your reasoning here. I would argue that any form of trade protectionism is not intelligent: it's very short-sighted and sacrifices actual wealth for employment. It's the type of thing that sounded and felt good to me only before I actually tried to learn a bit of economics. Think of it in terms of a small town that passed a law banning any form of trade between residents. Technically, 100% of people would be employed. They would be employed knitting their own sweaters, milking their own cows, growing their own grain, cooking their own food, gathering their own building materials, pumping their own water, etc. So life would be paradise with 100% employment right? Without trade, people would be on the edge of starvation and extreme poverty constantly. Scale up that analogy to put the residents of that small town as countries, and you can see where protectionist policies protect jobs at the expense of actual prosperity. North Korea is an imperfect extreme example, but you can easily see what effects limiting trade has on prosperity. If I was a politician, I'd love to pass all kind of trade policies like this because most people haven't really studied economics so it's easy to spin up your consolidation of power as protecting jobs.
  • Spivak 10y ago
    I'm not going to argue the whether protectionism is a good thing in general but a predatory doesn't mean that it's not worth it to the buyer, but that the profits of the sale leave the country. As an extreme example, if your country exports nothing but you have citizens buying goods from other countries then over time the country is going to become poorer and poorer as the capital flows out of the country. Free trade is good for regions with industry and when workers have the means to relocate to areas with employment. Until our immigration policy is indistinguishable from 'we're all basically one country' then trade protections are going to sometimes be a country's best option.
    • gwright 10y ago
      This is way to simplistic of an argument. In particular you are ignoring the affect of currency exchange rates as it relates to foreign trade.
• Nano2rad 10y ago
  30% sourcing of products from India is a requirement to start single brand retail stores in India. The ban on import of used phones is with some other law.