Officials said India is rushing to wrap up a slew of quick-fire bilateral trade agreements by the end of March, as the economic necessity is a change from New Delhi’s normally-slow-down approach on trade deals. The change also means Prime Minister Narendra Modi’s government is prioritizing “early harvest” agreements over comprehensive free trade agreements with partners, a move that has puzzled some countries, officials said. Said, to be identified as conversation is not private.
Several officials said that PM Modi’s office is pushing ministries, especially foreign and commerce, to close initial deals with countries including Australia and the UK. This is even as India walked away from Asia’s largest multilateral agreement in 2019 and has shown little interest so far in the Trans-Pacific Agreement.
For PM Modi’s ruling Bharatiya Janata Party, historically tied to foreign deals and harassing its loyal vote base of small traders, pushing for quick one-on-one trade deals is a kind of U-turn . To be independent Politically, the stakes are high as PM Modi seeks to revive the pandemic-battered economy and attract more investments from the US and its allies who are looking at India as an antidote to China.
According to officials, the urgency to close deals expeditiously stems from the realization that the window of opportunity to profit from the reconfiguration of global supply chains may be short-lived.
New Delhi is currently negotiating bilateral trade agreements with 20 countries and is expected to complete half a dozen deals with Australia and the UK by this Christmas and March next year respectively. This push for one-to-one trade agreements with an emphasis on early-harvest deals rather than comprehensive FTAs surprised at least two countries, officials with knowledge of the talks said, asking not to be identified as talks are underway. was being
There was no immediate comment from the Prime Minister’s Office or the Ministry of External Affairs.
According to officials, India’s realization of the need to prioritize trade as a geopolitical strategy has led to the emphasis on higher exports and quicker trade deals, which can boost GDP growth. In August, PM Modi made himself aware of the urgency as he addressed the heads of India’s foreign missions and urged them to help boost exports as global supply chains realigned.
While India announced manufacturing incentives such as production-linked incentives to attract global supply chains and create jobs, it may take longer to show results, said economists specializing in international trade and investment at the National University of Singapore. Amitendu Palit, who worked for India. Formerly the Ministry of Finance.
Officials said the trade ministry is under increasing pressure to examine the proposed deals more closely. Commerce and Industry Minister Piyush Goyal has now set a sizable target of $400 billion for India’s annual merchandise exports for the fiscal year ending April 2022 – a nearly 38 percent increase from the $290 billion recorded last year. He is also trying to take that number to $2 trillion by the end of this decade.
This is the first target for New Delhi after sidestepping multilateral trade agreements since PM Modi came to power in 2014. His government has emphasized greater self-reliance and reduced dependence on imports. This was the reason why India was moving away from the China-backed Regional Comprehensive Economic Partnership.
A senior commerce ministry official said India has “earned more trust” from trade partners during the pandemic by ensuring that not a single supply chain is disrupted, leading to the signing of agreements in view of the country’s economic development plans. Interest in doing so has increased. asked anonymity as he was not authorized to speak to the media.
The official said early harvest deals will “ensure things to move forward faster” in areas where there is easier agreement, while talks may continue on issues that will require more time before finalizing, on broader deals. are signed.
The re-engagement on trade by PM Modi’s nationalist government comes as a more than a year-long border conflict with China and the Taliban takeover in Afghanistan now poses a new threat to regional security. New Delhi is looking at strengthening trade with G-7 countries with strong Indo-Pacific strategies and growing influence in Central Asia such as the United Arab Emirates.
The people said the UK and India are in talks to cut tariffs and market access for around 600 products to reach an interim agreement by March. The Indian textile products, leather, footwear and chemicals under discussion, he said.
In return, India could provide access to processed food, some agricultural products as well as fin-tech, life sciences and medical device industries.
“Strategic and economic ties reinforce each other. Right now, countries and companies are looking for alternatives to China they can rely on,” said Tanvi Madan, director of The India Project at the Brookings Institution. “But these are difficult political issues in India and the partners have heard this rhetoric before. If one of these deals goes through it will greatly improve India’s credibility.”
This would include a change from the existing trade policy which has protected the interests of small domestic traders.
“We are nowhere opposed to bilateral trade deals,” said Ashwini Mahajan, co-convenor of Swadeshi Jagran Manch, a group allied with Modi’s party that wields influence among traders and wants to exit the RCEP in 2019. supported the decision.” “Having said that, we believe that strategic relations cannot be at the cost of national interest.”
In addition to risking political capital, the government’s hesitation to sign extensive deals also comes from a lack of reforms. Regulation in critical areas, including investment protection, e-commerce, data protection and even agriculture, must be in line with European and OECD markets.
It is a gap that the South Asian nation will have to fill before concluding comprehensive trade agreements.
Richard Rosso, Wadhwani Chair in US-India Policy Studies at the Center for Strategic End, said the current enthusiasm for quick deals could be linked to the pandemic-linked decline in India’s global goods trade deficit to $88 billion by November 2020. International study in Washington, citing its own data.
The deficit, widening to $133 billion by August 2021, “would hinder any effort to craft a strong trade deal. India can still go ahead with a trade deal, including lighter commitments, but there doesn’t appear to be a world-class deal.” Happens. Chances are,” Rosso said in an email. “I’m not very hopeful.”
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)