India is on the path of negotiating FTAs with over twenty nations including ASEAN, Australia and the EU. This strategic initiative is intended to mitigate the impact of new and increased U.S. import tariffs. India, meanwhile, is preparing to wrap up deals with the European Union, New Zealand and Chile. Look for major progress on the negotiations in the next few months!
The first agreement anticipated from this renewed push will be with Oman, where officials plan to sign an FTA in the capital, Muscat. This pact seeks to double trade between the two countries within five years. Further, it intends to focus on boosting India’s export growth in engineering goods, textiles, pharmaceuticals and agricultural products.
At the same time, India is aggressively negotiating to conclude dozens of free trade agreements (FTAs). This reply anticipates the dramatic 50% hike in U.S. import tariffs that went into effect in August. Yet amid India’s ongoing tariff war, the tariff hike is squeezing Indian exporters. In return, the federal government is doubling down to find new markets through aggressive trade deals.
In addition to the agreements achieved in recent years with the United Arab Emirates (UAE) and Australia, India has prioritized activating an ASEAN-India FTA. As a result, these deals have substantially boosted bilateral trade volumes with each country. India and the United Kingdom just proclaimed the harvest of long toil FTA. This deal will cut tariffs significantly on thousands of goods, such as Scotch whisky and English gin brought into India, while relaxing the rules on Indian food and spices sent to the UK.
As it stands, India has signed 15 FTAs with a total of 26 countries, in addition to six preferential trade agreements with another 26 countries. During the past year, the nation has been actively negotiating with over 50 other partners to further extend its global trade footprint.
New Zealand’s Trade and Investment Minister Todd McClay recently met Indian Trade Minister Piyush Goyal to discuss the ongoing trade agreements, signaling positive momentum in these negotiations.
“India is clearly using FTAs as a strategic tool to diversify export markets and soften the impact of steep and uncertain U.S. tariffs,” – Ajay Srivastava.
Even with these new developments, the expected bilateral trade agreement between India and the U.S. has not taken shape as expected. Both countries had intended for the first tranche to be completed by fall 2023, but as has been the case with these negotiations, delays have plagued talks.
Trade Secretary Rajesh Agarwal expressed optimism regarding the ongoing negotiations, stating, “I see positive progress on several of these, next year.”
India’s strategy to secure a wider network of FTAs aims to cushion against external economic shocks and anchor its export ambitions in an increasingly competitive global market. These pacts reduce or eliminate tariffs while creating more transparent rules of trade. Consequently, Indian businesses will prosper and open to the Indian economy larger markets.
Once the ongoing negotiations are successfully concluded, India will find itself in possession of trade agreements with almost all the major global economies, China being the notable exception. India’s ambitions to improve record as a trading partner. This bold, exploratory path lays the groundwork for more economic opportunity through increased sector diversification and collaboration with global partners.
