India cannot afford to sign trade deals merely to boost economic diplomacy. While in the past India has entered into several free trade agreements, these deals have not yielded the desired results.
Official sources said that while India is not opposed to signing trade deals in the future—as it is being made out to be after it pulled out of the Regional Comprehensive Economic Partnership (RCEP) —future agreements will be inked only after extensive consultations with stakeholders to ensure that they are mutually beneficial.
While there is need to relook at the free trade agreements (FTAs) that India has signed with various countries and economic bloc including one with the Association of Southeast Asian Nations (Asean), experts said that it may not be easy for New Delhi to revise these deals mid-way.
“After the FTAs are signed, it is not very easy to alter the contours during the period that is stated in these agreements,” an analyst said. Earlier, in an interview with a news channel, External Affairs Minister S. Jaishankar said that the FTAs that India signed with various countries over the years have not yielded the desired results.
“FTAs have not worked in the best interests of India. They have been badly negotiated. Whenever you sign an agreement, you must see whether my country is getting benefits,” added Ashwani Mahajan, national co-convener, Swadeshi Jagran Manch said.
Most trade agreements have led to a surge in imports of cheaper goods compared to the ones made in India. This has partly crippled the manufacturing industry.
“If it’s cheaper to buy goods which are imported, why should anybody purchase the same produced in India, as they turn out to be more expensive?” an official at a manufacturing unit said.
India’s overall trade deficit in 2019-20 stood at Rs 152.88 billion. The only silver lining was that the number was reduced compared to Rs 184 billion in 2018-19.
One of the major challenges has been the steady rise in Chinese imports. India's trade deficit with China stood at $48.66 billion in 2019-20. However, trade deficit between the two economies at $53.56 billion in 2018-19 and $63 billion in 2017-18.
India has been importing electronics, mobile phones, clocks, watches, toys, sports goods, furniture, gift items, plastics, besides raw materials such as chemicals, iron and steel, fertilizers, mineral fuel, metals and even active pharmaceutical ingredients (API) required for production of medicines such as antibiotics and lifestyle drugs.
Imports from China have reduced considerably after the government imposed several restrictions including tariffs and mandatory quoting of rule of origin..