India's Engagement in Free Trade Agreements (FTAs)
India has actively pursued regional and free trade agreements to enhance its trade prospects. This summary outlines India's current engagements, challenges, and strategic considerations in this domain.
Current Status of FTAs
- India has entered into 20 regional or free trade agreements as recognized by the World Trade Organization.
- Recent agreements include those with the United Kingdom (July) and the European Free Trade Association (October).
- Negotiations are ongoing with major partners such as the United States, European Union, Canada, and the Southern African Customs Union.
Challenges in Trade Agreements
- India faces American tariffs of up to 50% on key exports, fueling efforts to expedite agreements.
- There are structural and policy-driven issues with earlier FTAs with ASEAN, Japan, and South Korea leading to unfavorable trade balances.
- Trade deficit with ASEAN increased from $10 billion in 2017 to $44 billion by 2023.
- FTAs were often not tailored to India’s sectoral strengths, leading to an imbalance in trade benefits.
Strategic Considerations for Future Agreements
- Lessons from past agreements are crucial as India negotiates with the EU and the U.S.
- In negotiations with the U.S., consultations with various export sectors like services, seafood, engineering goods, and textiles are essential.
- Focus with the EU should be on carbon-intensive sectors due to mechanisms like the Carbon Border Adjustment Mechanism.
Support for Exporters
It's vital to support India’s exporters through improved standards, infrastructure, technology, and market intelligence to ensure FTAs deliver lasting benefits.
