India pursuing FTAs with EU and Canada

India pursuing FTAs not just with UK, but also EU and Canada

Washington: At a time when questions are being raised about the status of the proposed Free Trade Agreement (FTA) between India and the UK, especially in light of pro-Khalistan demonstrations in London, Union finance minister Nirmala Sitharaman has reiterated that besides the UK, India is also pursuing separate FTAs with the European Union and Canada. The finance minister was speaking Tuesday morning (Indian Standard Time) in Washington at the Peterson Institute for International Economics, a prominent American think-tank.

Sitharaman devoted a considerable portion of her discussion to India’s manufacturing and trade policies, highlighting that both are aimed at helping domestic manufacturers and facilitating partnerships with countries that are most feasible for India.

She also spoke out about how the World Trade Organization (WTO) — the inter-governmental regulator of international trade — should be “more progressive” and “fair to all members”.

“India has shown its initiative is working out well in pursuing with countries and agreeing to have FTAs with them,” Sitharaman said. “So, FTAs are being signed, in fact, far more speedily nowadays. We have just concluded one with Australia, an earlier one with UAE, Mauritius and we have had FTAs both in goods and services with ASEAN, with Korea, Japan.”

She added that FTAs on a bilateral and multilateral level have been the route India has followed since before 2014, and that this policy has quickened since 2019 with three major FTAs having been signed since.

“So we shall proceed in that route also with the UK, the EU and Canada,” Sitharaman said. “All three are happening now, as we speak. So we shall go in those preferential routes.”

“Catering to the domestic market has become attractive for many of those producers who wouldn’t have produced such things that were otherwise available for cheap from outside,” Sitharaman explained.

To capture this changing momentum, the Indian government has come up with a phased manufacturing programme. Under the programme, the FM explained, several goods have been identified whose manufacturing and sale in India will initially be incentivised. Thereafter, these manufacturing capabilities would be moved to “more sophisticated” methods and supply chains with a view to export these goods.

She did, however, reiterate that India has extended “quota-free, tariff-free” trade policies with least-developed countries that can make use of such agreements. “So any country, let’s say from Africa or anywhere else, the Pacific Islands or countries which are aspirational, low-income countries can export to India without any of these restrictions.”