India's Strategic Trade Agreements
Recent developments have seen India successfully conclude discussions on a free-trade agreement (FTA) with New Zealand and sign a Comprehensive Economic Partnership Agreement (CEPA) with Oman. Although these economies are not globally significant, these agreements mark a shift in India's approach to international trade pacts.
Changing Attitude Towards FTAs
- Initially, there was distrust towards FTAs, especially those signed by prior administrations.
- India has not yet begun substantive negotiations with peer economies due to competition concerns.
- The belief persists that integration with richer nations offers more benefits.
Importance of New Agreements
Engaging in new markets and deepening global integration is seen as beneficial for the Indian economy:
- Agreements with the UAE, New Zealand, Australia, and the UK indicate a shift towards broader economic partnerships.
- India now has formal trade pacts with three of the five Anglosphere economies.
Future Negotiations and Challenges
- Discussions with Canada are set to resume, despite past diplomatic strains.
- Talks with the US are at an advanced stage, although an agreement will be challenging to secure.
Significance of Larger Economies and Blocs
While bilateral agreements with smaller nations are important, larger economies and plurilateral groupings have a greater impact:
- Deadlines for agreements with the EU and US have been missed; completion is crucial by mid-2026.
- Delays with the US risk losing export contracts.
Re-evaluation of Blocs
India should reconsider involvement in larger trade blocs:
- Participation in the RCEP is geopolitically sensitive due to China's inclusion.
- The CPTPP includes nations like New Zealand, Australia, Japan, and the UK, offering potential for further integration.
The overall direction of India's trade policy is positive, but a more ambitious approach is needed to maximize economic benefits.
