India must negotiate well on free trade pacts: Experts

Source: Business Standard

Relevance: Negotiating Free Trade Agreement (FTA’s)

Synopsis: India is on the verge of signing FTA’s with some important nations. Let’s have a brief look at the subject.

Context: Recently, commerce and industry minister Piyush Goyal had said that India is at a ‘positive momentum’ with respect to inking trade deals with the UK, Australia, Canada, Bangladesh, EU, GCC nations,  and Israel.

Suggestions by the experts on FTAs:

• Focus on reduction in tariff – Experts say that reduction in tariff is equally crucial while working towards any deal.
• Better preparation– We need to provide better opportunities to other countries than the previous agreement.
• Discussion on the new subject– we should not restart discussions in areas where consensus has been reached.  Starting discussion around areas where there were differences will be a step in the right direction.

For further read – Free Trade Agreements (FTAs): Challenges & opportunities – Explained, pointwise

Why the urgency now?

• India’s exit from RCEP– This acted as a catalyst to sign better deals with other nations.
• Export opportunities–  due to a consistent surge in exports over the last few months, experts believe that such deals are important to continue the momentum.

Benefits of FTAs:

• Attracting investment– These FTAs will be effective in attracting investment in the country through PLI scheme.
• Boost Competition– FTAs will create an open market system, which leads to an increase in competition in the economy.