In the dynamic landscape of today’s global economy, India has emerged as a prominent player with immense potential and influence. As one of the world’s largest and fastest-growing economies, India’s role in the global market has evolved significantly. This transformation is a testament to India’s economic prowess and reflects the changing dynamics of international trade and commerce.
In this regard, Foreign Trade Agreements (FTAs) have become crucial instruments that shape a country’s economic landscape and international relations.
Here, we explore the recent Foreign Trade Agreements executed by India. These agreements are instrumental in opening new avenues for international trade and cooperation while offering numerous opportunities and challenges. Here, we will examine the critical FTA’s in India’s portfolio, dissect their implications, and assess their impact on the Indian economy.
Top Foreign Trade Agreements Executed by India
１．India-Australia Economic Cooperation and Trade Agreement (Ind Aus ECTA)
This agreement, signed in April 2022, has come into effect from December 29, 2022.
Impact: Australia being a raw material and intermediate producing country, this agreement would increase the demand for the finished products from India, which boosts the employment generation in India.
２．India-Mauritius Free Trade Agreement:
This broad-based agreement, signed in Feb 2022, covers a broad remit that includes trade in goods, services, trade facilitation, investment, technical regulations, customs procedures, rules of origin, dispute settlement, trade remedies, etc.
Impact: The historic trade agreement will allow Indian exporters and businesses to expand their investments and commercial interests in Africa.
３．India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA)
Signed in 2011, the IMCECA aims to deepen economic ties between India and Malaysia. This agreement covers trade in goods, services, investment, and economic cooperation.
Impact: The IMCECA has been instrumental in increasing bilateral trade and investment flows. Sectors like palm oil, electronics, and petroleum have seen substantial growth.
４．India-Japan Comprehensive Economic Partnership Agreement (IJCEPA)
The India-Japan Economic Partnership Agreement, inked in 2011, is a testament to the strategic partnership between the two nations. This comprehensive agreement encompasses trade in goods and services, investment, and intellectual property.
Impact: It has facilitated a surge in bilateral trade and investment, with Japanese companies increasingly looking to India as an attractive market for their products and services. Sectors like automotive, pharmaceuticals, and IT have mainly reaped the rewards of this agreement.
５．India-Korea Comprehensive Economic Partnership Agreement (CEPA)
The India-Korea CEPA, operational since 2010, has propelled economic cooperation between India and South Korea to new heights. This agreement covers trade in goods and services, investment, intellectual property rights, and economic cooperation.
Impact: This agreement has acted as a catalyst, significantly enhancing bilateral trade and investment, with both countries benefiting from improved market access. Industries such as cosmetics, chemicals, automobiles, and electronics have notably benefitted.
Impact on the Indian Economy
The cumulative impact of these trade agreements on India’s economy has been significant. These agreements have:
Boosted Trade Volumes: These agreements have substantially increased India’s trade volumes with partner countries. This growth in exports and imports has contributed to economic expansion and employment generation.
Diversified Markets: These agreements have diversified India’s export markets, reducing dependency on traditional markets and making the economy more resilient to global economic fluctuations.
Attracted FDI: Improved market access and business-friendly environments resulting from these agreements have attracted foreign direct investment into India, further stimulating economic growth.
Enhanced Productivity and Competitiveness: The agreements have forced Indian industries to become more competitive by adhering to international standards, driving innovation and productivity growth.
More excellent Consumer Choices: Indian consumers have benefited from a wider variety of goods and services, often at more competitive prices, due to these trade agreements.
Strengthened Diplomatic Relations: These agreements have not only had economic impacts but have also strengthened diplomatic ties and fostered regional and global partnerships, enhancing India’s standing in the international arena.
Foreign Trade Agreement (FTA) in the pipeline
India is actively exploring the possibility of entering into several Free Trade Agreements (FTAs). Here are some of the potential FTA’s and their potential impact on the Indian economy:
India-EU Free Trade Agreement (FTA)
Potential Impact: The Trade negotiations launched in June 2022 have the potential to unlock significant economic benefits. It could increase trade in goods and services and facilitate more significant investment flows between India and the EU member countries. It could also give Indian businesses enhanced market access to a large European consumer base.
India-Israel Free Trade Agreement
Potential Impact: An FTA with Israel could strengthen economic ties and increase trade and investment between the two countries. It could also foster collaboration in the technology, agriculture, and defense sectors by focusing on complementary areas where India and Israel hold a competitive advantage.
India-Turkey Comprehensive Economic Partnership Agreement
Potential Impact: An FTA with Turkey could increase bilateral trade and investment. It could also create opportunities for collaboration in sectors like textiles, automotive, and chemicals.
It is essential to understand that the actual impact will depend on the specific terms and conditions negotiated in each agreement and the ability of Indian businesses to leverage the opportunities presented by these FTAs.
Foreign Trade Agreements have emerged as a cornerstone in shaping India’s international trade landscape. The executed FTAs have paved the way for increased trade, economic cooperation, and investments with partner countries. Moreover, the ongoing negotiations for agreements signify India’s unwavering commitment to advancing its global trade agenda. As these agreements evolve, India’s economy stands on the cusp of even greater integration into the worldwide market, solidifying its position as a formidable force in international trade.