NEWS HIGHLIGHTS
Theme : Effects of Policies & Politics of Countries on India’s Interest
Paper : GS - 3
India has been talking about Free Trade Agreements (FTAs) with several partners – both bilateral and regional – over the past two years in a bid to boost export-oriented domestic manufacturing with an ambitious export shipment target of USD 450-500 billion by FY23.
TABLE OF CONTENT
- Context
- FTAs
- Impact of FTA on Global Economy
- State of India’s FTAs
- Major Issues Around India’s Foreign Trade Policy
Context : India has been talking about Free Trade Agreements (FTAs) with several partners – both bilateral and regional – over the past two years in a bid to boost export-oriented domestic manufacturing with an ambitious export shipment target of USD 450-500 billion by FY23.
FTAs :
- FTA is an agreement between the countries or regional blocks to reduce or eliminate trade barriers, through mutual negotiations with a view to enhancing trade.It includes goods, services, investment, intellectual property, competition, government procurement and other areas.
- This concept of free trade is the opposite of trade protectionism or economic isolationism.
- FTAs can be categorized as Preferential Trade Agreement, Comprehensive Economic Cooperation Agreement (CECA), and Comprehensive Economic Partnership Agreement (CEPA).
Impact of FTA on Global Economy :
- By blending local production with foreign trade, FTAs help boost growth in economies.As selected goods are produced by every country at lower costs due to FTAs, international trade increases production and consumption.
- In addition to facilitating borderless trade, FTAs help diversify supply chains by making it easier for more businesses to conduct business across borders.
State of India’s FTAs :
- India currently has 12 FTAs and India-UAE CEPA is the latest one.
- After India opted out of the Regional Comprehensive Economic Partnership (RCEP) in November 2019, the 15-member FTA grouping that includes Japan, China and Australia, FTAs went into cold storage for India.
- But now the bilateral free trade agreements of India are being negotiated with the United Arab Emirates, the United Kingdom, Australia and Canada.
Major Issues Around India’s Foreign Trade Policy :
- Lack of Transparency and Scrutiny: India negotiates most FTAs behind closed doors with very little information about the objectives and processes followed and negligible scrutiny.
- Negative Balance of Trade: In the past decade, India signed FTAs with the Association of Southeast Asian Nations (ASEAN), the Republic of Korea, Japan, and Malaysia. But India remains in the negative balance of trade with countries such as ASEAN and Japan despite the increase in exports.
- High Dependence on Imports: While India is 85% dependent on imports to meet its oil needs, a domestic coal crisis is also forcing to tap the overseas supplies of the dry fuel for meeting the power demand.
- Misunderstanding Self-Reliance as Protectionism: The Atma Nirbhar Bharat Campaign has exacerbated the view that India is increasingly becoming a protectionist closed market economy.
FAQs :
1. How many FTAs does India Sign?
Answer : India currently has 12 FTAs and India-UAE CEPA is the latest one.
2. How are FTAs Categorised ?
Answer : FTAs can be categorized as Preferential Trade Agreement, Comprehensive Economic Cooperation Agreement (CECA), and Comprehensive Economic Partnership Agreement (CEPA).