As India works out FTAs with GCC and UK, here’s why these agreements matter

Everything from Australian wine to wool is cheaper for Indians, while exports are from the country are sending more products to UAE without paying a duty. This hasslefree inflow and outflow of products has been enabled thanks to the end of protectionist policies that came with India’s economic liberalisation in 1991. Now the country is part of 13 free trade agreements, with major economies such as Australia and the UAE.

What are the perks of FTAs?

Free trade agreements (FTA) are simply pacts that allow import and export between two or more countries with minimal or no restrictions at all. Governments can provide concessions on levies paid for importing goods, and could remove restrictions that obstruct the free exchange of specific products. But this doesn’t mean that imports and exports can proceed in an uncontrolled manner, which is why separate agreements are signed with different countries with the terms they agree upon.

India’s equations with different partners

For instance, India’s free trade agreement with the UAE, allows traders from the country to send gems, dryfruits and textiles without paying any duty in Dubai or Abu Dhabi. On the other hand, India is giving free access to Australian goods such as wine, meat and wool to its market. Most importantly the India-Australia FTA allows India to import more Australian coal, which is essential for power generation. It also allows Indian entrepreneurs such as Adani to bring in more coal from his mine in Australia for its electricity production operations in India.

What will UK-India FTA deliver?

Similar to that, the India-UK FTA, which was supposed to be signed by Diwali this year, could’ve provided easier visas for high net-worth individuals who could invest in the UK as entrepreneurs. The deal was supposed to enable India-UK collaboration on research, innovation and manufacturing in the defence sector. In exchange for all that, it sought exemption from customs duties on products such as whisky and automobiles.

India has been boosting free trade with other countries since liberalisation, but also steered clear of the world’s biggest trade deal RCEP, because cheap foreign imports would’ve adversely affected its key sectors such as agriculture and dairy.

In a modern world, where countries depend on each other for several products from smartphones to specific minerals that have global demand, FTAs are a necessity. Apart from ensuring economic growth, such trade agreements also strengthen diplomatic relations.

Published on: Thursday, November 17, 2022, 05:26 PM IST