New Delhi: India Thursday signed a free trade agreement, officially dubbed as the Comprehensive Economic and Trade Agreement (CETA), with the UK – its 16th trade pact so far – as the country aims to boost bilateral trade and investments.
The other regions and countries with which India has signed such agreements include the four-nation European bloc EFTA, Japan, Korea and Australia.
Since 2014, the country has signed five trade pacts with Mauritius, the UAE, Australia, EFTA and the UK.
What is FTA?
A free trade agreement is an arrangement between two or more countries where they agree either to end or reduce customs duties on the maximum number of goods traded between them, besides cutting down non-trade barriers on a significant value of imports from partner countries and easing norms to promote services exports and bilateral investments.
The subjects covered under these pacts range from 10 to 30. Across the globe, over 350 FTAs are currently in force and most of the nations have signed one or more such agreements.
What are the benefits of FTAs?
Zero-duty entry into partner country markets helps in the diversification and expansion of export markets.
Level-playing field vis-a-vis competitors who may have already entered FTAs with partner countries.
FTAs enable preferential treatment in the partner country market over non-FTA member country competitors.
Such pacts attract foreign investment to stimulate domestic manufacturing. They allow access to raw materials, intermediate products and capital goods for value-added manufacturing.
Help achieve long-term efficiency and consumer welfare goals.
FTAs signed by India so far:
India has inked trade deals with Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, Korea, Japan, Australia, the UAE, Mauritius, the 10-nation bloc ASEAN (Association of Southeast Asian Nations), and four European nations’ bloc EFTA (Iceland, Liechtenstein, Norway, and Switzerland).
In addition, India is negotiating trade agreements at present with a number of its trading partners. The negotiations are underway with the US, Oman, the European Union (EU), Peru, and Israel.
Talks with Canada for a similar pact were put on hold due to certain political issues.
Advantages of these pacts:
These trade agreements have contributed to enhance market access, reduce tariff and non-tariff barriers, strengthen strategic partnerships, and support domestic industry through balanced trade facilitation.
Collectively, these FTAs reflect a strategic shift towards high-quality, comprehensive trade agreements designed to support India’s domestic manufacturing, services exports, and integration into resilient global value chains.
India-UK CETA:
India and the UK clinched a ‘landmark’ trade deal that will remove taxes on the export of labour-intensive products such as leather, footwear and clothing, while making imports of whisky and cars from Britain cheaper, in a bid to double trade between the two economies from the current about $56 billion by 2030.
India will cut import duty on Scotch whisky and gin from the UK to 75 per cent initially and to 40 per cent by the 10th year. At present, it is 150 per cent.
Tariffs on automotive imports will go from over 100 per cent to 10 per cent under quotas on both sides.
Key Indian sectors to get duty-free access in the UK:
Labour-intensive sectors (textiles, clothing, leather and footwear, gems and jewellery, furniture, and sports goods), processed food items, and other high-tariff product segments where India holds a strong competitive edge.
India also secures enhanced market access in sectors where it already holds strong export potential but previously faced moderate tariff barriers and that includes marine and animal products, vegetable oils, and chemicals.
PTI
