Fast-track agreements on the cards with at least six nations in line with New Delhi's revamped foreign trade strategy.
But in a departure from the standard pursuit of FTAs, New Delhi is keenly exploring the possibilities for early-harvest deals before eventually moving towards full-fledged agreements.
An early harvest deal is usually a less time-consuming precursor to a full FTA in which trading partners reduce tariff barriers on limited goods to promote trade.
According to Indian Commerce and Industry Secretary BVR Subrahmanyam, India will fast-track FTAs with at least six nations — including the UAE, the UK, Australia, Canada, and the EU — over the next few months, in line with its revamped foreign trade strategy. The earliest one may be signed with the UAE.
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“We have revamped our FTA strategy. India has to engage with the rest of the world," Subrahmanyam said recently. "Without that India will be shut out from global markets... The world has moved into bilateral or local/regional arrangements,” he said, adding that such trade deals assume more significance now as India is not a part of any local or regional arrangement.
The government is in “positive momentum” with respect to signing trade deals with the UK, Australia, Canada, Bangladesh, the European Union (EU), and Gulf Cooperation Council (GCC) nations, according to Commerce and Industry Minister Piyush Goyal. While the government is working towards “early harvest” agreements with the UK and Australia as part of a larger trade pact, the US has indicated that it is not considering a new trade agreement with India, Goyal said. India, he said, would look at working with the US on market access issues to promote bilateral trade.
In the UK, officials have indicated that it will try to strike an interim agreement which would allow for freer trade between the two countries, under the terms of an historic World Trade Organisation (WTO) charter.
A source close to international trade secretary Liz Truss said if both sides can see “quick wins” in negotiations that an interim agreement could be closed to soon slash tariffs on British exports. One of the UK’s main requests for this is on Scotch whisky, which India currently hits with 150 per cent tariffs. The high levels of taxation mean just 2 per cent of the 50 million bottles of whisky sold in India each year come from the UK.
"UK is progressing well. Teams are talking to each other. Line ministries are identifying areas in which we can quickly close the deal in terms of early harvest, if possible. Instead of trying to address 11,000 (tariff) lines, we can look at their and our areas of interest and close an early harvest agreement and (then) negotiate on the rest of the agreement,” Goyal said last week while addressing export promotion councils.
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The British High Commissioner to India, Alex Ellis, took to his official Twitter account last week to talk about it. He said that Britain wants a deal that removes any such barriers that might hinder business with India. He went on to add that this move will also create jobs and drive economic recovery. “What would you like to see in a United Kingdom - India trade deal? The UK wants a deal that removes barriers to doing business with India – creating jobs & driving economic recovery,” he tweeted. He said that UK businesses could share their inputs on the government website.
According to Bloomberg, an interim agreement with the UK is likely to be finalised by the end of the year. This would give medical devices and agricultural products access to the Indian market and bring about more job opportunities for Indian seafarers and nurses in the UK. The goal of this deal is to double the trade between the two countries by 2030 from the $33 billion in 2019.
According to Goyal, Australia has shown the “highest level of engagement” and significant interest to do an early harvest agreement, he said. But finalising a trade deal between India and the EU may not be a smooth ride, considering there are 27 nations in the trade bloc and talks have restarted after a gap of eight years. “We will work very hard to speed it up,” Goyal said.
Considering the past experiences, India has revamped its strategy towards inking trade deals and will not allow the “same mistakes” of the past. “We are engaging with industry to ensure that FTAs are fairly and equitably crafted. At the same time, FTAs cannot be one-way traffic. We also need to open our markets if we want a larger share in foreign markets. So, we need to identify areas where we can withstand competition. We can sort out FTAs fairly quickly if areas where we have the ability to compete internationally can be identified as part of a collective effort,” Goyal said. “Our effort is to ensure focus on countries where we have significant potential, where we can compete better, and where market size is significant,” he added.