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What is the news?
India is about to sign at least three early-harvest agreements and negotiating free trade agreements (FTAs) with the UK, the European Union, the United Arab Emirates, and Australia. Until now, India has signed an early-harvest deal with Thailand and Singapore.
India is approaching with a strategy to first ink a mini trade or early-harvest agreement(EHA), which will be a precursor to an FTA that will be signed eventually.
However, some experts cautioned citing past experiences with trade deal, saying the country must be circumspect in such deals.
What are the advantages of signing EHAs?
Signing EHA’s is a good strategy since it signals commitment from both nations and starts trade in a small way. FTA talks with India, signals the world wanting to do business with India.
| Must Read: India’s ‘early harvest’ trade deals could run into trouble |
What are concerns/issues regarding trade deals which India must consider?
Some experts believe the targets are too big right now and we are understaffed at present.
India should be mindful of the past experience of FTAs, especially concerning EHAs, since they have resulted in adverse developments for India. Besides, it also expanded trade deficit.
FTA with Thailand also had an EHA component. It resulted in an inverted duty structure and India suffered quite a bit.
Bilateral deals should be cast as widely as possible and not riddle them with exceptions. It is the exceptions that make them bad.
Source: This post is based on the article “India must tread with caution on early-harvest deals, say experts” published in Business Standard on 05 November 2021.
