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What is the news?
Recently, the Commerce Ministry said that the negotiations for India-UK Free Trade Agreement (FTA) will commence from November this year. The governments in both the countries are eager to conclude an interim agreement quickly, but the businesses are yet to warm up to the idea.
What are the findings of the study published by the NITI Aayog?
NITI Aayog did a study on FTAs. Here are its findings:
First, India should review and assess its existing FTAs in terms of benefits to various stakeholders and changing trade patterns in the past decade.
Second, negotiating bilateral FTAs with countries where trade complementarities and margin of preference is high may benefit India in the long run.
Third, reducing compliance cost and administrative delays to increase utilization rate of FTAs.
Fourth, proper safety and quality standards should be set to avoid dumping of lower quality hazardous goods into the Indian market.
Fifth, strictly deal with rules of origin should be strictly dealt with by the authorities.
FTAs have to be signed keeping two things in mind – mutually reciprocal terms and focusing on products and services with maximum export potential.
Why Indian businesses are not enthusiastic about FTAs?
India maintains a higher level of tariffs than the developed countries. If India will cut its tariff rates, then the partner countries in FTA will gain more. Consequently, imports by India from the partner countries may increase more than exports from India to the partner countries. So, the Indian businesses are not very enthusiastic about the trade agreements.
Source: This post is based on the article “Businesses should give useful inputs for FTA negotiations” published in the Business Standard on 19th September 2021.