A preferential route: Effectiveness of FTAs in Indian exports

May 4, 2022

The ongoing COVID-19 pandemic has devastating health and economic consequences, with unprecedented disruption to people’s lives, the global economy and world trade. The impact of the pandemic was opposite to the norms that drive Free Trade Agreement. On the one hand, FTA works on the principles of open and integrated economies and the other hand, the pandemic has influenced nations to close their boundaries strictly. Despite this, with the changing global landscape as a ramification of the ongoing pandemic, FTA remains a vital tool to facilitate and revamp global trade. This presents an opportunity for India to make the Indian economy export-oriented through the active bilateral and multilateral FTAs and RTAs. Recently, the Government of India has signed the Comprehensive Economic Partnership Agreement (CEPA) with UAE and Australia-India Economic Cooperation and Trade Agreement aiming to give a push to bilateral trade and increase exports in the coming years. Moreover, India has shown enthusiasm and actively negotiating FTA deals with countries such as Canada, Israel, the United Kingdom and European Union. FTAs are generally agreements that often include clauses on trade facilitation and rule-making in investment, intellectual property, government procurement, technical standards and sanitary and phytosanitary issues and provide a possibility for countries to enhance trade and exports, access to new markets, trade risk diversification, enhancing innovation and competition, better integration of markets and facilitating the transfer of skills and technology. However, the feasibility of the FTAs for India’s bilateral trade and exports still remains uncertain.