Centre to revamp FTA strategies to ensure economic benefits
Piyush Goyal had earlier indicated to work the agreements with ASEAN and Japan, as the imports seemed to have gained more than the exports due to the sharp reduction in tariffs.
The central government has been redetermining its strategy on entering into Free Trade Agreement (FTA) to make sure that the treaties provide economic and strategic benefits.
Separately, the focus has also been on the alliance with peaceful countries, especially those with which India does not have a significant trade deficit.
Discussions have already begun at the highest level with Union Finance Minister, Nirmala Sitharaman, Minister of Commerce and Industry, Piyush Goyal and Bibek Debroy, Chairman of the Economic Advisory Council to Prime Minister (EAC-PM). They met on July 20, 2020.
Why there is a need for re-evaluating FTA strategies?
The meeting on the decision for revamping the FTA strategies coincided with External Affairs minister, S Jaishankar’s statement mentioning that FTA hasn’t helped India much in building the capacity.
As there has been an expectation of greater thrust to FTAs with the European Union and Australia, as the United States and the United Kingdom are among the countries with which India will engage more aggressively, there is a requirement of recognizing that there is no need to rush into a deal.
Piyush Goyal had also earlier indicated to work the agreements with ASEAN and Japan, as the imports seemed to have gained more than the exports due to the sharp reduction in tariffs.
India was also expected to benefit more on the service front, as nurses and software professionals get easy access to the markets such as Singapore, Japan, Malaysia, and South Korea. But lately, while Singapore has been miser in giving out fresh visas, because of domestic issues, Japan has denied access to the Indian nurses, pointing the lack of language skills.
What has further complicated the matters is the presence of Chinese companies in ASEAN countries, which uses the benefits of lower tariffs for routing goods in India. The government also suspects that some Chinese goods are just repackaged in some of the FTA countries and are shipped to India without any addition to its value.
Revenue loss due to FTA:
The Finance Ministry is also concerned over the loss of revenue due to the trade agreements. Apart from this, these countries have also shown reluctance to address India’s concerns which encouraged the Indian government to review the treaties along with the suggestions that some of them must be terminated.
It has been expected that India will harden its stance and will make sure that its companies are also equal partners in the trade deals.