Great Britain and India

The purpose of this page is to ventilate that moderate Indian opinion which, recognizing all the difficulties, yet believes in the continued association of Great Ltritain and India within the loose framework of the British Commonwealth of Nations.

India and the Imperial Conference—Lessons of Colonial Conference of 1907—The Question of Imperial Preference

Sta,—It is generally recognized that the Imperial Preference Scheme which is to be discussed by the Imperial Conference is of vital interest to India. The Federation of the Indian Chambers of Commerce has already declared that any scheme of Imperial Preference imposed upon India would be thoroughly repudiated by responsible Indian commercial interests, unless such a scheme is adumbrated with the willing co-operation of a self-governing India. Indeed, the Federation has issued a timely warning to the effect that the scheme should be dropped for the present so far as India is concerned and thus save the Round Table Conference which is to meet imme- diately after the close of the Imperial Conference. With the tension of feeling in India being what it is, and with the economic boycott becoming more and more intensive, the warning of the Federation certainly merits close examination.

It will be recalled that the fifth and the last Colonial Con- ference in 1907 had thoroughly discussed the question of Imperial Preference. The attitude assumed by the India Oflice at that time, if adopted at the present moment, would save the Indian situation. I have examined this question in detail in the second of a series of papers I have contributed on India and the Imperial Conference" in the July issue of the Asiatic Review, London, and I may be permitted to review briefly the arguments vigorously urged by the India Office against the application of the Imperial Preference scheme to India.

The Indian fiscal system had always been, and is to a pre- dominant extent at the present day, that of a tariff for revenue purposes only. With most foreign countries India enjoys most-favoured-nation treatment. India has always exercised a facultative power of adhering to commercial treaties con- cluded between Great Britain and foreign states. In the case of France, the British Government had entered into a separate convention on behalf of India whereby the latter fonnally conceded most-favoured-nation treatment to French goods imported into India, and had secured the benefit of the French minimum import tariff for certain Indian products, such as coffee, which found a market in France.

The external trade of India with foreign countries being considerable, it is of paramount importance that these markets are favourably disposed to her. On the other hand, Indian trade with the self-governing dominions is insignificant as compared with her trade with foreign countries, such as the continental states of Europe, the Far East, and countries bordering the Indian Ocean, the Persian Gulf and the Bay of Bengal.

Indiais heavily indebted to England, and for the effective provision for the redemption of these debts her export trade must be actively fostered. It is no exaggeration to say that India's export trade concerns England as much as it does her own nationals. As such, the India Office Memorandum deduced the following principles governing India's external commerce in their relation to any scheme of Imperial Preference :—

(1) The external commerce of India, which is of considerable magnitude, ran in natural channels and has not as yet been per- ceptibly deflected from them by any protective tariffs of other coun tries.

(t) The fiscal system on which this external trade was based has 80 tar resulted in larger markets for exports and in cheap imports from abroad, for which latter there is an ever-growing demand in India.

(3) As a debtor country India requires the freest possible markets for its exports, and as a poor country she requires cheap imports.

(4) The present system had secured two-thirds of India's import trade to the United Kingdom, while the U.K. afforded a market for COdy onefourth of India's exportable produce.

(5) For three.fourths of this produce, markets had to be found outside the U.K. and seemingly did not exist to any appreciable extent in the self-governing dominions.

(6) Any diminution of India's trade with those foreign countries that are the largest buyers of her exports would at once loosen her power of buying English produce and meeting her obligations to English creditors.

The practical difficulties, the Memorand pointed out, of the proposed preferential tariff scheme arc considerable. Any preferential tariff would apply unequally to the trade of different foreign countries and would present itself to them in an even more objectionable form than would a uniform all-

round percentage reduction of tariff in favour of British goods. But the Continental States of Europe, whose trades would be mostly affected by a preference of this nature,

are large importers of Indian produce, provide markets for commodities for which there is no demand in the British Empire, and are in a position to make reprisals on India should they think fit to do so.

On the repercussions of a preferential scheme upon Indian opinion, the India Office Memorandum argued :—

'The claim would probably be made that if India is to fall into line with the colonies in this matter, it should be allowed to imitate their example in developing its own industries by the imposition of protective duties, such as are levied by the solf -governing colonies on goods imported from the United Kingdom."

Summing up the case of India against any intro-Imperial

preferential scheme being evolved, the late Sir James Mackay remarked :—

" The Government of India ' as in duty bound, have looked at this question from the Indian point of view, but they have considered it no less from a wider and Imperial point of view. . . . It is 0 matter of deep regret to those who are responsible for the govern- ment of India that they should find themselves at variance on this most important question with the statesmen of the various self- governing Dominions of tho Empire.' In any scheme of this kind which hinders her export trs.do 'there is no doubt that she has more to give than sho could possibly receive'. Finally, he pleaded, that 'in case the self-governing dominions decided in their wisdom to grant any preferenoe to the Mother Country, the name might be extended to India, but India could never support any scheme by which her over-growing trade with foreign countries would be annihilated.'" Twenty-three years have passed by since this historic Memorandum of the India Office was presented to the Colonial Conference of 1907. Numerous changes have been witnessed in the economic conditions in India. Her export trade has progressed by leaps and bounds. Her manufactures have shown a like expansion. Economic theories have been exploded and rediscovered. If only the India Office can rediscover this excellent Memorandum (Cd. 3524, pp. 453-57 (1907)), and produce another Sir James Mackay, the Indian situation would certainly improve and the Round Table Conference would be saved.—I am, Sir, &c.,

LANKA SUNDARAM,

M.A., Ph.D. (London), F.R.Econ.S., F.R.Stat.S.

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