India is hopeful of wrapping up negotiations for two more free trade agreements (FTAs) by the end of this year, on top of the two deals — with the UAE and Australia — that were clinched earlier this year, according to commerce and industry minister Piyush Goyal. New Delhi and London have been eyeing an FTA by Diwali (October 24), while another trade deal with Canada is expected to be sealed by December.
Addressing an event hosted by the US-India Strategic Partnership Forum in Los Angeles, Goyal said India and the US, too, desire to further bolster economic relations and strategic partnership. The US is India’s largest export destination. Its exports to the US jumped almost 48% on year in FY22 (albeit on a favourable base) to $76 billion, while its imports surged 50% to $43 billion.
Moreover, India and the GCC (Gulf Cooperation Council) members have almost finalised the terms of reference for launching trade negotiations soon, the minister said. The GCC comprises six countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
Trade agreements are a part of India’s broader strategy to almost triple its exports to $2 trillion by 2030. New Delhi’s FTA negotiations with key economies gained traction after it pulled out of the Beijing-dominated RCEP talks in November 2019. India signed an FTA with the UAE in February, its first with any economy in a decade, and a ‘substantial’ interim trade deal with Australia in April.
Goyal highlighted India’s bid to firm up FTAs with a number of advanced economies, including the UK, Canada and the EU, and the opportunities these deals will create, especially in labour-intensive sectors like textiles and garments. The country is on course to emerge as a $30-trillion economy in the next 25-30 years, he said, exhorting the Indian diaspora to take advantage of the immense investment opportunities that the country presents.
Although the Diwali deadline for the FTA with the UK was set in April, the political churnings in London following the resignation of then prime minister Boris Johnson slowed down the pace of talks a tad. Moreover, with the death of Queen Elizabeth-II and the consequent 10 days of national mourning in the UK, the final leg of the negotiations may see a delay of a few days. Nevertheless, official sources expect negotiations to gather pace once the mourning period is over so that the Diwali deadline is adhered to.
The formal negotiations for the FTA with the UK started in January, which could ultimately cover more than 90% of tariff lines. Both sides aim to double bilateral trade of both goods and services to about $100 billion by 2030. Key goods that are shipped to the UK include garments, pharmaceuticals and electrical machinery. But the India-UK trade is dominated by services, which make up about 70% of the overall annual commerce. As for the FTA with Canada, both the countries resumed negotiations for it in April after a gap of almost five years and agreed to intensify work towards ensuring greater market access. This FTA will likely include high level commitments in goods, services, rules of origin, technical barriers to trade, and dispute settlement.
India’s exports to Canada stood at $3.8 billion in FY22, while its imports hit $3.1 billion. Major exports include pharmaceuticals, chemicals, garments, gem & jewellery and steel.
(The reporter is in the US at the invitation of industry body CII)