A report by the Global Trade Research Initiative (GTRI) indicates that countries from large economies like Europe, the UK, the US, and Japan, to smaller ones such as Oman, Peru, and Mauritius are eager to establish a free trade agreement (FTA) with India due to its large and rapidly expanding market.
The implementation of an FTA would allow these countries to access the Indian market with minimal or no import duties, providing their companies with a competitive edge.
This is especially attractive as India currently imports more than 75 per cent of its goods from countries with which it does not have FTAs, presenting a significant new market opportunity.
However, GTRI also suggests that India may not see a significant increase in exports from FTAs currently being negotiated, as these countries already have low import duties, Economic Times reported.
GTRI Co-Founder Ajay Srivastava highlights that a large portion of imports from these nations are already happening at zero most favoured nation (MFN) duties. In contrast, only a small percentage of India's global imports are conducted at zero MFN duty.
The report further suggests that countries like the UK and Canada could benefit more from the FTAs, as they would be able to sell their products in India without the high duties that India typically imposes.
The report also recommends six steps for the government to consider during these negotiations, including creating a common exclusion list for merchandise trade negotiations, focusing on obtaining real market access, doing sectoral agreements with poor and developing countries instead of trade deals involving goods, services, and investments, and cautiously negotiating new subject areas such as environment, labor, data governance, digital trade, gender, small and medium enterprises, anti-corruption, and sustainable food systems.
Nishtha Anushree is Senior Sub-editor at Swarajya. She tweets at @nishthaanushree.
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