New Delhi: Commerce Minister Piyush Goyal recently took aim at trade agreements made during the Congress era, especially those with Japan and South Korea. He highlighted how these deals led to minimal gains for Indian exports while imports increased significantly. This disparity raises questions about the effectiveness of these trade pacts.
Goyal pointed out that while India entered talks for the Regional Comprehensive Economic Partnership (RCEP) under the previous government, the nation’s exports didn’t benefit as expected. RCEP includes 10 ASEAN nations and six free-trade partners, including China. Goyal expressed confusion over why India agreed to join, stating it became more of a deal between India and China.
Looking at the numbers, between 2004 and 2014, India’s trade deficit with China ballooned from under $2 billion to around $48 billion. This backs up Goyal’s concerns about the trade agreements, particularly with Japan and South Korea.
In 2024-25, exports to Japan did see a slight increase of 1.42%, totaling $6.25 billion, while imports rose by 2.62% to $18.91 billion. Exports to South Korea increased by 1.3% to $5.81 billion, but imports shot up by 2.92% to $21 billion. Goyal emphasized that imports from China into ASEAN countries surged post-RCEP, while their exports hardly improved.
He argued that by opting out of RCEP in 2019, India protected its industries. Currently, the government is reviewing its free trade agreements with ASEAN, Japan, and Korea. Interestingly, Goyal noted that businesses in Japan and Korea prefer to source materials locally, unlike India, where companies sometimes import materials to save costs.
This shift from foreign dependency toward supporting local manufacturing aligns with the broader movement to boost MSMEs (Micro, Small, and Medium Enterprises) in India. Goyal’s appeal to embrace ‘Swadeshi’ (self-sufficiency) reflects a growing sentiment in Indian industry to focus on domestic production and supply chains.
In light of these discussions, recent surveys show that over 65% of Indian startups are leaning towards local sourcing, indicating a significant change in business mindsets toward national growth.
For more information on India’s trade agreements, refer to this report.
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FTA, GOYAL CRITICISES CONGRESS FTA, MINISTER PIYUSH GOYAL, GOYAL CRITICISES CONGRESS ERA FTAS WITH JAPAN KOREA OVER EXPORT WOES
