New Delhi, Aug 8 (PTI) India should "aggressively pursue" a free trade agreement with the European Union, besides moving ahead with land and labour market reforms and reducing regulations to accelerate its growth trajectory, the 16th Finance Commission Chairman Arvind Panagariya said on Friday.

Speaking at the Business Today India@100 event, Panagariya said India faces a pivotal moment in the current geopolitical order of higher tariffs on exports and the country should now push the pedal on its reform agenda.

"At this pivotal moment we should aggressively pursue the Free Trade Agreement with the European Union. That is very, very important. As one market seems to be kind of closing, we need to open wider another market... EU agreement needs to be done and then there are reforms that need to be done particularly with labour market and land market," Panagariya said, while speaking at the 'India@2047: Blueprint for a Developed Nation' event.

On August 6, the United States announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty, taking the total duty to 50 per cent effective August 27.

The White House said the measure responds to India's continued purchase of Russian oil.

To a question on what needs to be done for India to become a developed nation in the context of the current dismantling of global trade order, Panagariya said it is a pivotal moment for us to be looking for how India should be modifying its growth path.

"Particularly, in the present context in some ways this is practically like the 1991 moment that there is a crisis that has been brought about by the massive tariffs that the United States (has imposed)... It is a good time to look back and take stock and think of what we could do. A number of things to be done. Our reform agenda... a lot of things got done and a lot of things remain to be done," Panagariya said.

He said India has come out of much bigger crises and the economy currently is "robust". In times of trade crisis, he said supply chains shift depending on where the best deal is available.

"If we face higher tariffs in the US and lower tariffs in the European Union, and Vietnam faces lower tariffs in the US, then our exports can shift out of the US into the EU... In markets, the profit motive is strong and entrepreneurs are so smart, that they readjust the supply chains very rapidly," Panagariya said.

He said in the longer term, "if we set our own house in order, (I don't see) there is nothing stopping our trajectory of growth. I see considerable room for acceleration (of growth trajectory) that we have".

India is the fastest growing major economy with an economic growth projected at 6.5 per cent in the current fiscal. India is poised to become the world's third largest economy by 2027. Currently, it is the fifth largest economy in the world with a GDP of around USD 3.9 trillion.

Asked if India can be called a protectionist nation, Panagariya said: "There may be some protectionist measures. But if you ask whether India is an open economy, Yes of course".

Asked on the "dead economy" jibe, Panagariya said: "You don't grow at 7 per cent plus (if the economy is dead), and in dollar terms we are actually growing at more than 7 per cent. I don't know what the definition (of dead economy) is. Maybe dead bodies do move".

Last week, US President Donald Trump had remarked that India is a "dead economy" as he imposed a steep 25 per cent tariff plus a penalty for Russian imports.

To a question on what more reforms can be undertaken, Panagariya said at the central government level, there could be more trade agreements and also a focus on Asian markets for exports, besides, "reassessing our stance with China".

Also, implementing the labour codes, which has already been approved by Parliament, will be crucial for job creation and manufacturing.

At the state government level, Panangariya suggested that land-related reforms need to be done. "When we think about urbanisation, we are thinking about how to make life better for citizens of cities and towns. We don't think about preparing our cities for the businesses," he said, as he suggested easing the land acquisition process.

Besides, cutting down on the number of regulations both at the centre and state level will help in ease of doing business.

Observing that no country requires so many permission for exports and quality control orders (QCOs) are instruments of protection, Panagariya said: "we are probably the only country in the world which effectively, through this multiple permissions, put a restraint on our exports". PTI JD DRR