[Answered] After a decade of eschewing free trade deals, India has embarked on an FTA-signing spree that is quickly transforming the country into one of the most FTA-engaged countries in the world. Elaborate and discuss the factors promoting FTAs in India.

Introduction: Contextual introduction.

Body: Explain how India is one of the most FTA-engaged countries in the world.  Also write the factors promoting FTAs in India.

Conclusion: Write a way forward.

FTA is an arrangement between two or more countries under which they agree to end tariffs and non-tariff barriers on a large value of imports from partner countries. The focus of an FTA is primarily on economic benefits and encouraging trade between the countries by making it more efficient and profitable. But FTAs may also have political or strategic benefits.

One of the most FTA-engaged countries in the world:

  • At the turn of the century, the country negotiated several FTAs, which included deals with Singapore, Malaysia, Japan, Korea, and the ASEAN (Association of Southeast Asian nations). These FTAs were greatly encouraged by the Look East Policy (LEP) and undoubtedly expanded India’s trade and investment links with Southeast and East Asia.
  • On 18 February 2022, a comprehensive economic partnership agreement (CEPA) with the UAE was concluded within 90 days of commencement of negotiations and has been in force since 1 May 2022.
  • In addition, an Economic Cooperation and Trade Agreement (ECTA) with Australia also concluded on 2 April 2022.
  • The next highly-anticipated Free Trade Agreement in the works is with the UK. Free Trade Agreement discussions are also on the fast track with Canada, the EU, as well as with the Gulf Cooperation Council (GCC – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) and Israel.

Factors promoting FTAs in India:

  • India’s active participation in global value chains (GVCs) is essential. Today, 70 percent of the global goods and services exports come from GVCs. GVCs require close trade cooperation, lower duties, and efficient customs administration, which can be ensured by an FTA.
  • The inclusion of new-age areas like digital trade in FTAs will enhance cooperation and transform GVCs by lowering entry barriers, increasing transparency, and facilitating collaborative networks.
  • India aims to achieve a $2 trillion trade target by 2030, while it wants to achieve $500 billion merchandise exports by 2022-23 and to achieve these goals would require preferential access to Indian exports in major markets through Free Trade Agreements.
  • The conventional markets are slowing down. There has been a slowdown in the US and Europe. So, there is a need to diversify and go to as many economies as one can to expand market presence.

For the industry to grow and become globally competitive, integration into the global value chain is inevitable. Ultimately, all trade deals are a game of ‘win some, lose some’ and a balanced outcome is what all trade partners should be looking for.

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