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India has been pursuing efforts into enhancing its ties in the global economy of trade again with the reemergence in Free Trade Agreement (FTA) lately. These agreements are very important in the pursuit of liberalising trade, and creating more economically integrated and thereby improved position in the international market place for India . This blog analyses the three main steps taken by India to reboot FTAs and their impact on the economy and global trade.

1.Strategic Partnerships with Key Nations

Among the Indian brightest steps, it is possible to mention an attempt to shift to establish FTAs with significant partners. For example, India has now reset its target to finalise the CEPA with countries such as UAE, Australia and UK. It means these nations are important trade partners but also hold tremendous untapped potential for business across industries from technology to defense and renewable energy.

The India UAE CEPA signed in February 2022 has begun to pay off — the countries’ trade turnover has exceeded $ 85 billion. In like manner, India entered into an FTA with Australia under the ECTA November 2022 Economic Cooperation and Trade Agreement. They offer Indian exporters better market access and sharper tools; they cut on import taxes and increase the efficiency of Indian industries.

The continuous negotiation with the UK for a covetous Comprehensive Economic Partnership agreement is favorable to sectors like IT services, Textile, and automobile components. When made, this agreement should therefore pave way for broader engagement between the EU and India which is still a market very important for Indian exports.

2.Focus on Regional Economic Integration

India’s second major step has been to broaden access to regional trade organizations. Since the Sixth RCEP Summit in Bangkok in November 2019, India has been seeking new regional alternatives. As part of its trade strategy, the IPEF and its collaborations with the countries of ASEAN present India’s interest in becoming an influential player within the respective value systems.

India’s bilateral trade with ASEAN nations has crossed $ 110 billion and bounced with the help of many policies like the Act East Policy. Seeking refreshed partnerships with these countries means getting improved market outcomes for sectors such as agriculture, pharmaceutical, and electronics.

Additionally, India taking part in BIMSTEC acronym for ( Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation)aiming at upgrading trade with the neighbouring SAARC and southeast Asian countries. Such partnerships not only increase the profile of India within the region but also enable India to effectively utilize a geo strategically location.

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3.Promoting Domestic Competitiveness

The third tripod of India risk management into FTAs is coupled with domestic reforms with the aim of building competitiveness of Indian industries. Schemes like PLI and Make in India are very well aligned with FTAs because these help in building manufacturing capabilities and championing innovation and the overseas opportunities.

For instance, the PLI scheme for electronics has lead to infusion of fund and has made India as a preferred destination for electronics manufacturing especially in smartphones. The South Korean and Japanese FTAs give the Indian manufacturers an opportunity to acquire high-quality input components and technologies. Besides, India’s return to green energy and sustainability fits well with its FTA plan.

Contracts contain terms such as technology transfer and investment in renewable sources usable as the country strives for zero emission in the next half a century. The combination of domestic policies with the international agreements maintains sustainable economic status.

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The Benefits of Reviving FTAs

The tables below show that reviving of FTAs has many fold advantages for the Indian Economy. Firstly, it opens up market access for Indian products and services exports and secondly, makes them more competitive. Second, authorities and trading partners appreciate these agreements since they bring FDI due to more openness in trading partners countries.

Also, FTAs benefit SMEs as they create market access and reduces tariff incidences which allow the SMEs to export on the international market. For instance, textile and shim, handicraft and Agriculture have been good beneficiaries of the effort to reduce or eliminate barriers to trade. In addition, employment generation also results from relations formed by FTAs in enhancing industrial growth as well as export volumes. As India continues to lay down development strategies that seeks to make the country a $5 trillion economy by the year 2025, these agreements plays a big role in developing the country’s economy and creating employment opportunities in different fields.

Challenges and the Way Forward

However, FTAs are not without their difficulties as this paper has explained. The local industries are pressured by imported products which are cheaper in price, making an impact to the industries. To this end, India has been seeking the terms, which contain guidelines on the commencement of safeguard measures, as well as the planned schedules for tariff elimination. One more issue is the integration of the envisioned FTAs with the overall concept of the Indian strategy.

Taking the resource exchange to power relations, bargaining can be done equal to the profit factor with the politics and diplomacy factor. For instance, India’s apprehension to join the RCEP due to the trade deficit it has with China and the effects it held to put on its economy and industries. There are important lessons that India needs to learn and apply in future: First, the country needs to fashion a broad coalition to support FTAs; Second, the negotiations process of FTAs have to be more transparent.

Finally, there is need to ensure that the arrangements under FTA are consistent with the objective of sustainable economic development in the long term. Posing enhancements in the trade infrastructure, investing in skill development and encouraging innovation will add on to the strength of India in the forthcoming international trade environment.

Conclusion

India’s efforts to reignite the Free Trade Agreements make up a progressive move toward the improvement of its impact on the global economy. In terms of strategic partnerships, regional integration and domestic competitiveness, India is well on the way to becoming an important player in the international trade system. Besides contributing to the growth of economies these extend commitments India has shown towards ensuring sustainable and inclusive development. India has developed a very sound FTA framework that as the world turns into a global village, the country must be on the right side of the trade cycle to provide a win-win situation to both business and individuals.

Source : Buzz Artical & HSUX Solutions

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