ET Analysis| India has signed a flurry of trade accords, but do they deliver the goods?

India's foreign trade policy has undergone a significant transformation, especially in recent decades. From an initially protectionist stance post-independence, influenced by socialist planning, India embarked on a path of economic liberalization in 1991. This pivotal shift opened its economy to global markets, reducing tariffs and non-tariff barriers, and encouraging foreign investment. Initially, India focused heavily on multilateral trade negotiations through the World Trade Organization (WTO). However, with the slow pace of multilateral talks and the proliferation of regional trade agreements globally, India began to recalibrate its strategy.

What we are witnessing now is a 'flurry' of bilateral and plurilateral trade accords, a strategic pivot after India's decision to withdraw from the Regional Comprehensive Economic Partnership (RCEP) in November 2019. The government's rationale for exiting RCEP was concerns over potential negative impacts on domestic industries, particularly agriculture and dairy, and an inability to secure adequate protections against a surge in imports from certain countries, notably China. This withdrawal signaled a clear shift towards more tailored, beneficial bilateral agreements where India could negotiate from a stronger position, focusing on its specific export interests and strategic priorities. Current negotiations and signed pacts with countries like New Zealand, Oman, and the UK exemplify this renewed vigour.

The primary objective behind these new trade agreements is multifaceted: to significantly boost India's exports, enhance market access for Indian goods and services, attract foreign investment, facilitate technology transfer, and deepen overall economic relationships. India aims to diversify its export basket and destination markets, reducing over-reliance on a few partners. This strategy is crucial for achieving the nation's ambitious economic goals, including the aspiration to become a $5 trillion economy.

Several key stakeholders are intricately involved in this dynamic trade landscape. The **Government of India**, particularly the Ministry of Commerce and Industry, is the principal architect and negotiator of these trade pacts. Their role involves identifying strategic partners, conducting detailed economic analyses, and engaging in complex diplomatic negotiations. **Indian businesses and industry associations** like CII, FICCI, and ASSOCHAM are crucial stakeholders, providing input on market access issues, tariff reductions, and non-tariff barriers that affect their sectors. They stand to benefit from increased export opportunities and reduced import costs for raw materials. **Foreign governments and businesses** are also key players, seeking access to India's vast and growing consumer market, investment opportunities, and a reliable supply chain partner. Lastly, **Indian consumers** are impacted by the availability, quality, and pricing of imported goods, while **domestic producers**, including farmers and MSMEs, face both opportunities in new export markets and potential challenges from increased competition.

This matters immensely for India. Economically, successful trade pacts can lead to higher GDP growth, increased employment, and improved balance of payments. Politically, they strengthen India's diplomatic ties and strategic partnerships, enhancing its influence on the global stage. Socially, increased economic activity can lead to better living standards and infrastructure development. The article highlights India's existing trade deficits with major blocs like ASEAN, South Korea, Japan, and the UAE, contrasting them with surpluses with Mauritius and the SAFTA bloc. The new wave of FTAs is specifically aimed at addressing these imbalances by securing better market access for Indian products in deficit regions and expanding trade with surplus partners.

Historically, India's trade policy has evolved from import substitution to export promotion. The current approach aligns with India's 'Act East' policy and broader efforts to integrate into global supply chains while fostering domestic manufacturing under 'Make in India' and 'Atmanirbhar Bharat' initiatives. While 'Atmanirbhar Bharat' emphasizes self-reliance, it's not about isolation but rather building domestic capabilities to engage with the world from a position of strength, making strategic trade agreements vital.

From a constitutional perspective, **Article 253** of the Indian Constitution grants Parliament the power to make any law for implementing any treaty, agreement, or convention with any other country or any decision made at any international conference, association, or other body. This provides the legislative backing for India to enter into and enforce international trade agreements. Furthermore, the **Foreign Trade (Development and Regulation) Act, 1992**, provides the legal framework for the development and regulation of foreign trade. The **Foreign Trade Policy (FTP)**, updated periodically (e.g., FTP 2023), outlines the government's strategy and incentives for promoting exports and regulating imports.

Looking ahead, the future implications are significant. If these trade agreements are effectively implemented and managed, India could see a substantial boost in its manufacturing and services sectors, leading to higher economic growth and job creation. However, challenges remain, including ensuring fair and equitable terms, protecting vulnerable domestic sectors, and developing robust dispute resolution mechanisms. India's ability to leverage these pacts for technology transfer and integration into global value chains will be key to its long-term economic success and its aspiration to become a leading global economic power.