Mint Quick Edit: Sorry, Lutnick, that’s just a market myth

4 months ago 7

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The American market may turn out to be less critical for India than US Secretary of Commerce Howard Lutnick suggests. (AFP)

Summary

The consumer is always right. So said the US commerce secretary in the context of why he expected India’s return to trade talks. Here’s why it rings hollow as an argument.

Just before warm words traded by the leaders of India and the US shortened the odds of a trade patch-up, US commerce secretary Howard Lutnick predicted India’s return to talks. America is the world’s biggest consumer, he said, and “the consumer is always right."

This old maxim is often traced to suit-tailoring services, but sounds jarring for an innovative country where Ford delivered mass motorized mobility while people sought faster horses and Apple came up with personal computers without folks asking for it.

The customer may not know enough to invariably be right. And with its 50% tariff against imports from India, the US shuts out the potential benefits of Indian product innovations. That’s self-defeating.

Washington may not be interested in thriving off the world’s ideas, but a barred US augurs badly for its own future. Also, its market may turn out to be less critical for India than Lutnick suggests.

Even so, today’s trade impasse should remind us that export heft often stems from shipping stuff whose demand is relatively price inelastic: or what keeps selling even if it costs much more. Getting innovative, or staying ahead of the customer’s voice, could help get us there.

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