The government is keen on concluding negotiations for at least three free trade agreements (FTAs) in the next two months to ensure they materialise into conclusive deals before the General Elections later this year. Official sources say India’s commerce ministry is trying to finalise the trade deals with Oman, the UK as well as the four-nation bloc of European countries that includes Iceland, Liechtenstein, Norway and Switzerland, by February.
With two rounds of talks with Oman completed, the India-Oman Comprehensive Economic Partnership Agreement (CEPA) may be the first one to be signed. The India-UAE trade pact, signed in February 2022, is expected to have given a boost to the negotiations with Oman, while also serving as a model, given that both nations are members of the Gulf Cooperation Council. Fresh talks with the UK and the European Free Trade Association are also scheduled for later this month and in February.
Officials believe the talks will conclude successfully despite the need to resolve some sticky issues regarding market access, movement of skilled labour and rules of origin. Chances are that the CEPA with Australia—that will replace the current interim pact—would also be concluded later in 2024. This would mean that India could sign as many as four FTAs in 2024, likely giving a significant boost to bilateral trade with these regions. But, experts caution that the gains could take a while to materialise. For instance, the India-Australia Economic Cooperation and Trade Agreement (ECTA) has wrought significant gains since it became operational in December 29, 2022, but a lot of ground remains to be covered.
Ajay Sahai, Director General and CEO of Federation of Indian Export Organisations, says there’s a distinct shift in India’s FTA strategy, compared to the past when the country would sign deals with competing economies that were also strong in manufacturing. “The FTA strategy has now been revised to sign deals with complementary economies.”
But, he points out that it takes some time for the industry to assess issues such as market potential and market access, hence the impact of a deal can be fully assessed only after three years.
For Indian exports that are still to recover, conclusion of even one FTA would be a positive.