Trade Winds: India And UK Are Engaged In Preparatory Work For Launching A Free Trade.

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Commerce Secretary  Anup  Wadhawan said India and UK are engaged in preparatory work for launching a free trade agreement (FTA)negotiations that would start later this year. Would resume before the negotiations planned FTA with the EU.

New Delhi was also  exploring the feasibility of either reviewing or upgrading various existing trade agreements….

FTAs with ASEAN, Japan, and South Korea to make them more balance, for instance, it’s seeking a review and planning to upgrade its preferential trade agreement with Chile and Mercosur.

On November 19th since its pull out of the Beijing-dominated RCEP trade negotiations, India has been seeking to expedite talks with key economies for ‘fair’ and balanced trade pacts. Analysts have already pointed out that the FTAs signed with ASEAN, Japan, and Korea(all before 2010) have added to India’s large trade deficit, and domestic exporters haven’t been able to benefit much more from them. In FY20, before the pandemic spread its tentacles, India’s trade deficit with ASEAN was as high as $24 billion. Its deficit with South Korea and Japan stood at close to$ 11 billion and $8 billion, respectively.

Refuting claims of a few analysts, Wadhawan stressed that the production–linked incentive(PLI) schemes announced by the government in the aftermath of the pandemic are fully compliant with the World Trade Organization (WTO) rules as the incentives are tied to output’.

The government has announced 13PLI schemes, covering sectors, including auto, telecom, electronics, pharma, advanced chemistry cells, textiles, food processing, and steel. The total promised incentives of Rs.1.97 lakh crore will be spread over five years.

Wadhawan exuded confidence that the country would be able to meet the ambitious $400 –billion merchandise export target for FY22. The ‘impressive’ increase in exports in recent months has been driven predominantly by growth in external demand, and not so much by a rise in global commodity prices.

Merchandise exports have exceeded even the pre-pandemic level(same months in 2019) for three months through May despite the second Covid wave, including that recovery is probably taking roots. Of course, export growth was low even before the pandemic-outbound shipments rose about 9% in 2018-19. But again shrank by 5% in 2019-20. Exports dropped 7% last fiscal, weighed down by the Covid disruptions. So, only a sustained uptick over the next 2-3 years would help the country recapture the lost height of exports.