India's ongoing efforts to diversify the product basket and destination of exports through various Free Trade Agreements (FTAs) can enhance trade opportunities even in a global slowdown, Economic Survey 2022-23 has noted. However, the benefits one can derive from such FTAs will depend on the ability of the private sector participants to capitalize on such opportunities, it adds.
The survey, presented in the Parliament today, acknowledged the fact that slowing global demand is weighing on India’s merchandise exports but said that when the base or global GDP or global trade is not growing, export growth will have to come predominantly through market share gains. For that private sector participants will have to focus on efficiency, productivity, technology, and innovation, the survey observed.
India's lower average age of the working population and advantage of economies of scale can help the country cater to the global demand for several products in a cost-effective manner, it said.
"The economic rationale for FTAs was the diversification and expansion of India’s exports to its trading partners, providing a level playing field vis-à-vis the competing countries having preferential access in our trading partners, as well as gain easier access to raw materials and intermediate products, at lower costs, for stimulating value-added domestic manufacturing," the survey pointed out.
It also observes that the limited progress in the multilateral trade negotiations at the WTO is one of the reasons responsible for the increase in FTAs which are considered easy to negotiate and provide flexibility to factor in geopolitical considerations.
India has so far concluded 13 FTAs and 6 Preferential Trade Agreements (PTAs). The most recent in the list are the India-UAE Comprehensive Economic Partnership Agreement (CEPA) which was signed on 18 February 2022 and officially entered into force on 1 May 2022 and the India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA), which was signed on 2 April 2022 and entered into force on 29 December 2022. The country is also engaged in FTA negotiations with UK, Canada and EU and is in the process of getting some of the existing FTAs with countries like Singapore, South Korea and ASEAN reviewed.