March 20, 2020
These trading partners include Sri Lanka, Afghanistan, Thailand, Singapore, Japan, Bhutan, Nepal, South Korea, and Malaysia
The growth has been driven by India’s rising consumption as well as growing capabilities in next-gen R&D and manufacturing
While both imports from and exports to these FTA partners recorded growth, the utilization rate of FTAs has been moderate
The Government’s improving ties with strategic foreign partners have aided these partnerships, empowering a multitude of stakeholders
India’s bilateral trade under Free Trade Agreements (FTAs) or Preferential Trade Agreements (PTAs) recorded a cumulative average growth rate (CAGR) of 7.1 per cent over the past five financial years, as per an internal assessment released on March 20. These trading partners include Sri Lanka, Afghanistan, Thailand, Singapore, Japan, Bhutan, Nepal, South Korea, and Malaysia. While both imports from and exports to these FTA partners recorded growth, the utilization rate of FTAs both for India and its partners has been moderate. The growth has been driven by India’s rising consumption at both retail as well as commercial levels, along with the country’s growing capability in next-gen R&D and manufacturing.
The economic impact assessment of FTAs is a continuous process that is undertaken both in terms of data analysis and stakeholder consultations. An analysis of preferential import data for some of these agreements indicates that the FTA utilization rates have been moderate to high in the case of some sectors like iron and steel for the India-Korea Comprehensive Economic Partnership Agreement (CEPA) and India Japan CEPA. Plastics in the case of India-Singapore Comprehensive Economic Cooperation Agreement (CECA) and auto-motives in the case of India-Malaysia CECA. Such partnerships have helped strengthen India’s trade ties, in turn boosting foreign exchange reserves and the economy as a whole.
The review of the trade agreements is undertaken based on the mutual consent of the trading partners and demand from domestic stakeholders. Two reviews of the India Singapore CECA have already been completed. The India-Bhutan Agreement on Trade Commerce and Transit was renewed in 2016 while the India-Nepal Treaty of Trade was extended in 2016. Eight rounds of negotiations have been completed for the review of the India Korea CEPA which commenced in 2016. Moreover, India has taken up the review of India Japan CEPA and India ASEAN FTA with its trading partners. The Government’s improving ties with strategic foreign partners have aided these partnerships, empowering a multitude of stakeholders.