India’s focus on free trade agreements (FTAs) needs a shift towards practical implementation. Experts highlight that while these agreements are in place, many exporters aren’t fully benefiting from them. Historically, India’s utilization of FTAs has remained around 25%, whereas developed countries achieve rates of 70-80%. Closing this gap is now a critical step in trade policy.
Gulzar Didwania from Deloitte India emphasizes that the priority should be to help exporters utilize these agreements effectively. India has signed several FTAs, including with Singapore, Japan, and the UAE, and has finalized agreements with Oman, New Zealand, and the European Union. The challenge now is translating negotiated benefits into real access at borders.
Didwania also points out that FTAs can mitigate the impact of geopolitical uncertainties on exports. They can create alternate trade routes and improve access to various strategic markets. To take full advantage, India should diversify its export markets and deepen its integration into global supply chains.
Rudra Kumar Pandey from Shardul Amarchand Mangaldas & Co. notes that while the FTA utilization rate under the Australia-India Economic Cooperation and Trade Agreement (ECTA) has reached 84%, awareness among micro, small, and medium enterprises (MSMEs) remains low. He argues that every exporter needs to understand the preferential access offered by these agreements and have the right support for documentation and compliance.
Certain sectors, like textiles and pharmaceuticals, need targeted support to build the necessary production capacity. This includes developing domestic certification systems and aligning with international regulatory standards. Pandey emphasizes the importance of helping firms meet quality and sustainability standards to fully leverage FTAs. Government support for technical assistance is crucial.
India’s export landscape is evolving. In the last decade, electronics as a share of total exports increased from 3.3% to 7.9%. Machinery and smartphones are also seeing growth. However, this shift introduces vulnerabilities, especially as these sectors often rely on imported inputs from countries like China. Any disruptions can directly impact India’s production capabilities.
To thrive, India needs to treat its FTA network as a foundation while simultaneously enhancing domestic production. Reducing tariffs on raw materials could help lower costs for manufacturers, making them more competitive.
Investing in standards, infrastructure, and technology is essential for meeting compliance demands and maximizing opportunities from FTAs. By narrowing the gap between domestic capabilities and market opportunities, India can position itself for sustainable growth.
For more insights on India’s trade policies, check out this detailed report from the World Trade Organization.
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INDIA FTA IMPLEMENTATION, INDIA EXPORTS, INDIA FTA TALKS, INDIA SHOULD NOW FOCUS ON FTA IMPLEMENTATION, UTILISATION BY EXPORTERS: EXPERTS
