FTA shield in turbulent times: How India is locking in growth as global tariff walls rise

India's proactive embrace of Free Trade Agreements (FTAs) marks a significant strategic pivot in its economic policy, designed to navigate the turbulent waters of global trade protectionism and secure sustained growth. This approach is a departure from historical cautiousness and reflects a pragmatic recognition of global economic realities.

Historically, post-independence India largely pursued an inward-looking, protectionist economic model, characterized by high tariffs and import substitution, aimed at fostering self-reliance. While this approach had its merits in nascent industrial development, it also led to limited integration with the global economy. The economic reforms of 1991, triggered by a balance of payments crisis, ushered in an era of liberalization, opening up India's economy to global trade and investment. However, initial engagement with FTAs was cautious, often focusing on regional blocs like SAARC and BIMSTEC. The early 21st century saw India signing FTAs with ASEAN, Japan, and South Korea, but the pace and ambition have significantly accelerated in recent years, particularly in response to rising global trade barriers and geopolitical shifts.

What's happening now is a deliberate and aggressive pursuit of comprehensive FTAs with key economic partners. The recent successes include the India-UAE Comprehensive Economic Partnership Agreement (CEPA), signed in February 2022 and operationalized in May 2022, which has already shown tangible benefits in boosting bilateral trade. Building on this momentum, India is actively negotiating robust trade deals with nations like the United Kingdom and Oman, as highlighted by the article. These agreements are not merely about tariff reductions; they often encompass broader areas such as services, investment, intellectual property rights, and dispute resolution mechanisms. The overarching goal is to secure preferential market access for Indian goods and services, reduce trade barriers, and integrate India more deeply into global value chains.

Key stakeholders in this strategy include the **Government of India**, primarily the Ministry of Commerce and Industry, which spearheads the negotiations and policy formulation. **Indian businesses**, especially exporters and manufacturers, are crucial beneficiaries, gaining easier access to new markets and competitive inputs. **Domestic industries** face both opportunities (cheaper raw materials, larger markets for finished goods) and challenges (increased competition from imports). **Foreign governments** like the UK and Oman are also key stakeholders, seeking similar benefits of market access, investment opportunities, and strategic partnerships with a rapidly growing economy. Ultimately, **Indian consumers** stand to benefit from a wider array of goods and services at potentially lower prices.

This strategy matters immensely for India. Economically, it's a powerful tool to boost exports, which are critical for earning foreign exchange, reducing the trade deficit, and supporting the 'Make in India' initiative by providing global markets for domestically produced goods. A shrinking trade deficit, as noted in the article, signifies a healthier external sector and greater economic stability. Politically, successful FTAs enhance India's global standing as a reliable and significant trading partner, strengthening its diplomatic ties and strategic influence. They also contribute to diversifying India's trade basket, reducing over-reliance on a few markets, and building resilience against global supply chain disruptions, a lesson starkly learned during the COVID-19 pandemic.

From a constitutional perspective, India's engagement with international trade agreements is rooted in specific provisions. **Article 246** of the Constitution places 'Trade and commerce with foreign countries' under the Union List (Entry 41 of the Seventh Schedule), granting the Parliament exclusive power to legislate on these matters. Furthermore, **Article 253** empowers Parliament to make any law for implementing any international treaty, agreement, or convention, thereby providing the legal basis for ratifying and enacting FTAs into domestic law. The **Foreign Trade Policy (FTP)**, periodically announced by the government (e.g., FTP 2023), serves as the comprehensive policy framework guiding India's international trade strategy, aligning with the objectives of 'Atmanirbhar Bharat' (Self-Reliant India) by promoting exports and making India a global manufacturing hub.

The future implications are significant. India is poised to deepen its integration into the global economy, potentially becoming a central node in diversified global supply chains. We can expect an acceleration in FTA negotiations with other major economies and blocs. However, challenges remain, including ensuring that FTAs genuinely benefit all sectors of the Indian economy, addressing concerns of domestic industries about increased competition, and effectively resolving potential trade disputes. India's cautious stance on multilateral agreements like the Regional Comprehensive Economic Partnership (RCEP) underscores its preference for bilateral FTAs that can be tailored more precisely to its economic interests. This strategic shift towards targeted bilateral agreements is key to locking in growth and asserting India's economic prowess on the global stage amidst rising protectionism.