India could continue to look beyond free trade agreements in goods to expand the scope of agreements to incorporate service agreements, investment agreements and enhance regional monetary cooperation and cooperation in trade logistics.
In this context, India has moved beyond free trade in goods by signing a number of comprehensive economic cooperation/partnership agreements with countries/blocs like Singapore and Asean. Similarly, the India-Sri Lanka free Trade Agreement is being transformed into a comprehensive economic partnership agreement (Cepa) and India is negotiating such an agreement with Mauritius. India could sustain this trend as it provides an opportunity for achieving greater levels of global economic integration, in goods, services as well as in investment.
According to a study on ?Regional trade agreements: Gateway to global trade?, brought out by Export-Import Bank of India, India could also capitalize on its dynamic comparative advantage in the services sector, which has been consistently contributing over 50% of India?s GDP since 2000-01, compared to many leading economies of the world and could pursue FTAs on services with developed countries and leading emerging economies where services sector is a major component of economic activity, which could largely prove to be in India?s favour. Having well established itself as a growing services sector driven economy, India could pioneer in setting a trend in FTAs exclusively on services. It could adopt a new approach in moving from services to goods and thereby, set a new trend in global economic integration.
India could also explore opportunities to enter into investment agreements with other countries based upon the strength of robust economic fundamentals and growing investment attractiveness of India in the global arena in view of increasing foreign investment inflows and infrastructure investment opportunities. Bilateral investment agreements could play a crucial role in facilitating the prospective growth of FDI in India as also contribute towards higher levels of outward investments from India.
India could also consider enhancing its regional monetary cooperation with a view to support and facilitate its regional trade integration.
It is also recommended that India could take initiatives to enhance cooperation in trade logistics and could explore opportunities in transshipment services given its strategic location between the west and the east. Such cooperation in trade logistics could significantly reduce transaction and shipment costs and time.