The Commerce Ministry has carried out detailed studies and reported that India is not losing on the export value chain because of FTAs. It is a commonly held view that India’s Free Trade Agreements with Asean, Korea, Japan, etc. are not resulting in significant advances in the consumer goods’ imports.
The report also confirmed that there was no rise in export of raw materials. The analysis done by the report also verified that the Indian industry is losing price competitiveness in conventionally resilient areas like engineering products, textiles and automotive components because of the large cost of doing business, high taxation, infrastructural bottlenecks and logistics.
It has also confirmed that the industry and Indian exporters are not utilising the pacts to their full potential.
An official from the Commerce Ministry disclosed to the media that the imports are on a rise and so are the exports of intermediary goods and capital goods, which depicts the country’s ability to source inputs, add more value and then again export them.
The official said, “It shows India is becoming part of the regional value chain of South Asia,”
“Data on preferential trade does not confirm fears that India is becoming a dumping market for consumer goods,” he said further.
The Information Technology Agreement of the WTO is what was leading to increasingly mounting imports of electronic goods and not the FTAs.
He also went on to say that the since the preferential duty rates related share of imports doesn’t surpass 22 % in general inbound shipments as far as any of the FTAs signed by India are concerned, it is certain that the preferential imports under FTAs did not in any way help in the increasing trade deficit with the associated countries
At preferential rates, the share of imports in case of various FTAs:
Asean: 14.5 per cent
Japan: 22.4 per cent
Singapore: 10.8 per cent
South Korea: 21.8 per cent
However, it is also true that presently, India is not well equipped and lacks the proper system for gathering data pertaining to exports.
So far, India has signed FTAs with Malaysia, South Korea, Japan, Singapore, South Asia and Asean.
Role of FTAs:
Free Trade Agreements (FTAs) are the economic instruments that leverage competencies in investments and trade. India had decided to enter FTAs so that the exports related to goods and services could not only be expanded but diversified also with the partners and regions and increase access to capital goods and raw materials so that the value added domestic manufacturing could be stimulated.
The FTAs have sufficient safety measures incorporated so as to confront the negative effect of imports on the domestic industry and take corrective action against import surges, the official explained.
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Tushita is a political writer at thenational.net. Her deep rooted interest in politics, passion for writing and craze for travelling define her. Writing since her school days, she aspires to write lifelong and make the world a happier place to live with the power of her pen.
