India’s FTA journey can be divided into 3 distinct phases. These phases demonstrate India’s adaptability and willingness to explore new avenues for economic growth and cooperation on the international stage.
Phase 1: 1975-2004
Focus was on reducing tariffs to promote merchandise trade
-India embarked on its FTA journey in 1975 by signing the Bangkok Agreement with Bangladesh, Sri Lanka, and S Korea. This evolved into APTA in 2005, with the inclusion of China. APTA is unique as it grants concessions on Chinese goods entering India.
– In 1989, India joined the GSTP, which involved 43 other developing countries and aimed to exchange tariff concessions.
-India also signed the SAARC Preferential Trading Arrangement (SAPTA) in 1993 to boost trade with immediate neighbors.
(APTA, GSTP and SAPTA agreements are known as Preferential Trade Agreements because of limited trade coverage. An agreement is called a FTA when tariff concessions are exchanged on substantial trade.)
-It was not until 1998 that India signed its first FTA with Sri Lanka, facilitating access to the Indian market.
Phase 2: 2004-2022
Shift in focus to comprehensive pacts covering goods, services, investments, and other subjects.
-In 2005, India’s signed its first Comprehensive FTA with Singapore, the Comprehensive Economic Cooperation Agreement. Singapore’s cooperation paved the way for India to sign an FTA with ASEAN in 2010.
– India signed Comprehensive Economic Partnership Agreements with South Korea (2010), Japan (2011), and Malaysia (2011).
-Between 2012 and 2021, India didn’t sign any new FTAs as it was engaged in negotiations with various countries and groups (EU, EFTA, Australia, New Zealand)
-India also decided not to join the RCEP due to concerns over imports from China, insufficient safeguards for domestic industries, and lack of flexibility on certain issues.
-The dry spell ended in 2021 when FTAs with Mauritius, UAE and Australia were signed in the next two years.
Phase 3: 2023 onwards
Shift in focus from East bloc countries to Western nations. Priorities: UK, EU, Israel, Switzerland, and the US.
-Negotiations include new issues like environment, labour, IPR, digital trade, government procurement, competition, and gender. New issues primarily pertain to behind-the-border measures impacting domestic policies and regulations.
-Indo-Pacific Economic framework (IPEF) being negotiated with the US and 14 other nations, focusing on new issues rather than market access through tariff negotiations.
India’s FTA journey reflects its commitment to international trade and economic integration, showcasing adaptability and a willingness to explore new avenues for global cooperation and economic growth.
Source Credits: GTRI