FTA Updates – India’s Take on Free Trade Contracts in 2023

India has been a hub for outsourcing and manufacturing for a while now. A nation open to trade and commerce with international partners, it has signed free trade agreements with several countries in the past. At regional and bilateral levels, India’s FTAs span a wide spectrum of contracts with countries. Over the last two years, the Indian government has encouraged trade with gusto, to give the economy a needed boost. Additionally, free trade agreements between India and other countries strongly encourage export-based manufacturing within India.

India’s FTAs – Ambitious Targets

The Government of India has always set targets ambitiously where free trade agreements are concerned. By the first quarter of 2023, its shipment export target has been fixed at US$450 to $500 billion. That’s not all. The stakes have been raised further. For the next 25 years, Piyush Goyal, Minister of Commerce, has stated India will actively work at achieving a target of US$2 trillion for exports of goods and services by the year 2030. India, continuing in its legacy of ambitious aims, predicts that it will have a 25% share of exports by the year 2047. It is important to note that between April and September 2022, India’s exports of merchandise reached an amount of US$229 billion.

India’s Attitude Switch

From being a traditional nation in the trade arena, India has shifted to being a key player in both commerce and trade. This is mainly due to the attainment of international trade deals and early harvest contracts. At the moment, there are a large number of countries that are in negotiations with New Delhi regarding free trade agreements. The list of countries keeps growing as New Delhi has relaxed its regulations in terms of trade and commerce, as a draw for foreign investment. The countries which are currently vying for pacts with the Indian government are Canada, the UK, Israel, the European Union, the GCC, and Bangladesh. With Australia and the UAE, contracts have already been entered into.

In Support of Free Trade

The Indian Ministry of Commerce and Trade has made no bones about its support of free trade, reiterating several times that India is open to agreements with all nations. In the past, the ministry has requested the ASEAN bloc to get rid of non-tariff impediments, stating that trade involving both regions would be equitable and could amount to US$200 billion. With a decrease in market restrictions, India believes that the ASEAN bloc could go a long way in forging multilateral free trade pacts. As far as India’s FTAs are concerned, two agreements of major importance are those between the UAE and the Australian continent.

The India-Australia Deal – A Crucial Precursor to FTAs with India

As per the Indian government, the trade agreement between Australia and India will be in effect from the end of December 2022. The Government of India has made all the arrangements for this to come into force in a timely manner, completing domestic regulations. The ECTA, or the Economic Cooperation and Trade Agreement, would go a long way in saving tariffs for Australian exporters, amounting to US$2 billion annually. Businesses and consumers will see savings amounting to US$500 million on finished goods imports. Within the ECTA agreement, Australian exports (amounting to 85%) will stand to enjoy market access will be nil duty. 

Opening the Doors of Business

As India embarks on relaxing rules and putting pressure to establish concessions to boost free trade with potential partners, the doors of business around the globe open. 

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