QUAD will increase India’s Trade


    In News

    • Recently, Moody’s stated that India’s membership of the Quadrilateral Security Dialogue (QUAD) would give it an opportunity to benefit from greater trade and investment flows.

    Moody’s Forecast: Key Points

    • India is poised to become a growing destination market for goods from the other Quad countries, including commodities, machinery and chemicals.
    • The U.S. and Japan will continue to be major sources of foreign direct investment (FDI) to India in services, telecommunications and software, while Australia’s presence will grow as a result of a free-trade agreement with India.
    • The magnitude of the trade flow shifts would also depend on improvements in India’s business climate and the level of investment attractiveness.
      • It remains weak compared with that of other Asia Pacific economies and other Quad members – Japan, U.S. and Australia.
    • India also stands out as a relatively protectionist market for goods and capital, reflected in its high weighted average import tariff.
    • As economies diversified production of critical products and technologies, the Quad would continue to drive some long-term supply-chain shifts toward Southeast Asia and India
      • This may include greater Australian exports of commodities including copper, energy and agricultural goods to these economies. 


    • QUAD is an informal group of India, the US, Japan and Australia.
    • It is a strategic dialogue with the objective to ensure a free, open, inclusive and prosperous Indo Pacific.
    • Shared values between the nations are:
      • Political democracies
      • Market economies
      • Pluralistic societies
    • Timeline:
      • 2007: 
        • Japanese PM Shinzo Abe mooted the idea of Quadrilateral Security Dialogue
        • It could not materialize due to the reluctance of Australia
      • December 2012: 
        • Shinzo Abe again initiated a concept of Asia’s Democratic Security Diamond, involving Australia, India, Japan and the US.
        • The aim was to safeguard the maritime commons from the Indian Ocean to the western Pacific.
      • November 2017: 
        • The QUAD Coalition was finally given a present-day form with the active participation of India, the US, Australia and Japan.
        • The aim was to keep critical sea routes open and free for navigation in the Indo-Pacific.
    • Foreign ministers of the four countries held their first meeting under the ‘Quad’ framework in New York in September 2019. 

    Importance of QUAD for India

    • Countering Chinese Influence: 
      • Recent stand-offs on the Indo-China Border and the reluctance of Russia to step in and build pressure is forcing India to look for alternatives.
    • Post-COVID Diplomacy: 
      • The disruption across the world and non-transparent systems of China pose an opportunity for India to take lead and become the World’s Manufacturing Hub.
      • India can leverage its expertise in the vaccine and pharma industry to increase its soft power.
      • Further, Japan and the US want to shift their manufacturing companies out of China in order to curb its imperialistic behavior.
    • India’s SAGAR initiative:
      • India under the SAGAR initiative wants to become a net security provider in the Indian Ocean.
      • QUAD cooperation may give India access to multiple strategic locations for creating Naval bases.
    • Multipolar World: 
      • India has supported a rule-based multipolar world and QUAD can help it in achieving its ambition of becoming a regional superpower.
    • Climate Change:
      • The climate crisis calls for urgency in action. 
      • Quad nations are already driving their efforts toward climate ambition, including working on the 2030 targets for national emissions and renewable energy, clean-energy innovation, and deployment. 
      • The most commendable commitment is their focus on increasing the Indo-Pacific region’s resilience to climate change by improving critical climate information-sharing and disaster-resilient infrastructure.


    • Decreasing Dependence on China: 
      • As economic ties are expected to deepen among members seeking to reduce their dependence on China.
      • As reflected in its reluctance to join the RCEP trade agreement, India is keen to reduce its dependence on imports from China while expanding its market access to Australia, Japan and the U.S. 
    • Financial & Industrial Support: 
      • Financial services companies in the US, Japan and Australia will benefit from the shifts, which will also support India’s industrial and capital market development.
      • A further increase in tensions between Quad members and China would accelerate companies’ plans to diversify their production centres in Asia.
    • Trade Benefits for India:
      • India will benefit from Quad-related supply chain shifts by increasing trade with member economies and diversifying its sources of imports from China. 
      • For India, the costs of pivoting from China toward Quad members as priority markets for trade growth will be relatively low, given that only a small share of its exports currently go to China. 

    Source: TH