Low FTA use by trade partners but little adverse impact on India

Shedding light on the alleged adverse impact of free trade agreements (FTAs) on Indian industry, new data shows that the extent of their utilization by exporters of trading partner countries is low.

"As per preferential import data available, the extent of utilization of FTAs by the exporters of the trading partner countries is low," Commerce Minister Nirmala Sitharaman told Rajya Sabha in a written reply.

"Impact evaluation of FTAs is a continuous process which starts even before FTA negotiations are entered into," she added.

The commerce ministry's recent impact analysis has found that of Japan's total trade with India, only 22 percent could be ascribed to the FTA. Among other countries, Malaysia (3.47 percent), Asean nations (17 percent) and Korea (25 percent) benefited from having FTA with India.

The commerce ministry concluded that FTA utilisation by trading partners is not enough to cause concern.

Last year, former finance minister P. Chidambaram cautioned the commerce ministry against hasty signing of FTAs.

India has signed FTAs with about 20 countries while it is negotiating such agreements with Australia, Canada, New Zealand and the EU.

However, the industry ministry is of the view that FTAs have adversely impacted manufacturing in the country.

Former commerce minister Anand Sharma had defended them saying that India's exports gained from the regional and bilateral FTAs.