India’s Free Trade Agreements – The ‘present’ and the ‘future’

India

Trade is of great importance to most nations in the modern world. Trade without barriers – free trade – is promoted by institutions like the World Trade Organisation (WTO). In this background, as an emerging superpower, India’s Free Trade Agreements deserve special attention.

In this article, let us analyze some of the Free Trade Agreements (FTAs) signed by India and some of the new/proposed FTAs.

Table of Contents

What are Free Trade Agreements (FTA)?

A Free Trade Agreement is an agreement between countries to reduce or eliminate trade barriers. Trade barriers include tariff barriers like taxes and nontariff barriers like regulatory laws.

Trade barriers include tariff barriers like taxes and nontariff barriers like regulatory laws.

A Free Trade Agreement or FTA is an agreement between two or more countries where the countries agree on certain obligations that affect trade in goods and services, and protections for investors and intellectual property rights, among other topics.

India- ASEAN Free Trade Agreement

Economic Perspective

Challenges in India-ASEAN Free Trade Agreement

India-ASEAN

Even though the Trade Agreement with ASEAN has helped trade grow immensely with India, still, the issue remains that the agreement has benefitted the ASEAN region more than India.

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India and RCEP

Regional Comprehensive Economic Partnership, also known as RCEP is a mega trade block that is being negotiated between the ten members of the ASEAN group and six other members namely South Korea, Australia, China, Japan, New Zealand, and India.

Advantages for India

Challenges for India

South Asia Free Trade Agreement (SAFTA)

Free Trade Agreements

India-European Union Free Trade Agreement (Proposed)

Future of the Free Trade Agreements and India’s stand on them

The unilateral termination of the BITs with so many nations should be reviewed, especially when India is being projected as a bright spot in the global economy.

The move comes as a regressive step as it increases the confusion of the foreign investors who wish to invest in India. Also, the clause which says at least five years of national litigation is necessary after which the international tribunals can be approached looks like a step in the wrong direction.

This goes against the government’s slogan of ‘More Governance, Less Government’ and against the concept of ‘Ease of Doing Business’ in the nation.

Regarding the FTAs, India should be very careful in the clauses of negotiation. Despite having a strong services sector in a select few categories, ( IT, ITES, Healthcare and Education, etc.) the agricultural sector as well as the industrial sector, especially the Micro, Small, and Medium Scale Enterprises are still not as mature and strong as compared to the other countries with which India is negotiating FTAs.

For the sake of gaining an advantage in the services sector and access to foreign markets in services, which are also not completely accessible because of the nation’s reservations, India ends up compromising on the primary and secondary sectors which affects too many livelihoods and the economy overall.

Thus, the negotiations at an international level should be done only after proper deliberation and understanding of the situation.

Article by: Aadarsh Clerk