India is eyeing a major reset of its free trade agreements, including exiting those that have brought few tangible benefits to the country and have instead hurt domestic industry, government officials said. Most trading arrangements have a clause for a review or exit.
There is renewed focus on trade deals with the US, the European Union and the UK, which are key markets for Indian exporters and are keen to diversify their sourcing. India opted out of the Regional Comprehensive Economic Partnership. India could seek a review of some trading agreements including renegotiating tariffs on some items and a tightening of provisions governing country-of-origin certification.
The government has set up four working groups to assess the trade agreements holistically and frame a fresh strategy for them, taking into account the geo-political changes following the Covid-19 outbreak, which will spur investments into the country and boost exports, according to government officials. The move follows a recent high-level meeting chaired by Prime Minister Narendra Modi. These inter-ministerial groups that include the finance, commerce and industry and external affairs ministries, will chalk out a comprehensive plan.
There has been a growing view among policymakers that FTAs signed by India have not brought the expected tangible benefits and on the contrary, have hurt the country’s manufacturing sector due to liberal rules of origin. A detailed assessment of FTAs in terms of goods, services and investment flows has been carried out both by the commerce department and the economic division of the finance ministry.