India should audit existing FTAs to assess effectiveness: Report

India should audit existing free-trade agreements (FTAs) and assess whether they have met the intended objectives, a report jointly prepared by four think tanks said on Thursday. It added that the future trade pacts be aligned closely with industrial and export priorities.

 

“As India enters more FTAs, stakeholders are increasingly concerned that these pacts may primarily facilitate partner countries’ entry into the Indian market rather than enhancing export performance,” the report titled, ‘Resilience in a Fragmenting World: India’s Economic Relations with Great Powers,’ noted.

 

“To address this issue, India must audit its current trade agreements to assess whether they have translated into meaningful gains,” the report released by Koan Advisory Group, in association with Chintan Research Foundation, the Information Technology Industry Council, and the Institute of Chinese Studies, noted.

 

Citing the example of India’s FTA with the Association of Southeast Asian Nations (Asean), the report highlighted that following the FTA, “India’s imports from the Asean nearly doubled to over $57 billion in 2018-19 from around $30 billion in 2010, widening the trade deficit.” “Much of this was due to Chinese goods being rerouted through Asean economies to benefit from preferential tariffs,” the report said.

 

The report is based on a series of consultations culminating in a recent roundtable that brought together senior voices from the government, industry and civil society to examine India’s evolving economic engagement with the US and China.

 

“India needs a clearer understanding of what each agreement delivers in terms of market access, supply-chain resilience, and industrial capacity,” a press statement, quoting Chintan Research Foundation President Shishir Priyadarshi, said. “In a more uncertain and protectionist world, evaluating whether our FTAs have met their objectives becomes even more important.”

 

India has indeed seen its trade deficit expand after the implementation of several trade agreements with partner countries, including the new-generation pact with the United Arab Emirates, as well as agreements signed over the past decade with Asean and South Korea.

 

After the trade deal, India’s exports to the UAE have risen by $13 billion over the past four years, while imports have increased by $24 billion. Meanwhile, the trade imbalance with Asean and South Korea has become so pronounced that the government has already sought a review of the agreements.