“Why India is Reviewing Key FTAs: Industry Insights” | (भारत के प्रमुख एफटीए की समीक्षा क्यों की जा रही है – उद्योग समाचार )

Main Points In Hindi (मुख्य बातें – हिंदी में)

1. भारत के व्यापार समझौतों की समीक्षा: भारत के 14 देशों या आर्थिक ब्लॉकों के साथ द्विपक्षीय व्यापार समझौते हैं, जिनमें से चार प्रमुख समझौतों को समीक्षा या सुधार के लिए फिर से विचारित किया जा रहा है।

2. यूएई के साथ सीईपीए का संकट: भारत और यूएई के बीच हाल के व्यापक आर्थिक साझेदारी समझौते (CEPA) में व्यापार के संदर्भ में उत्पत्ति के नियमों के उल्लंघन का खतरा है, जिसके कारण भारत ने अधिक निगरानी की मांग की है।

3. आयात पर प्रभाव: पिछले 18 महीनों में भारत की सोने और चांदी के आयात में उल्लेखनीय वृद्धि हुई है, जिसका सीधा प्रभाव सरकारी राजस्व और घरेलू उद्योग पर पड़ा है। यूएई से चांदी का आयात 5,853% और सोने के आभूषण का आयात 290% बढ़ा है।

4. भविष्य की चुनौतियाँ: भारत को अपने अधिकार क्षेत्र के तहत किए गए शुल्क रियायतों की समीक्षा करनी होगी, क्योंकि इससे घरेलू उद्योग की सुरक्षा पर प्रभाव पड़ सकता है। विशेषकर, हीरा व्यापार में शून्य शुल्क का प्रावधान चिंता का विषय है।

5. गैर-टैरिफ बाधाएँ और व्यापार संतुलन: विशेषज्ञों के अनुसार, भारत को एफटीए से अपेक्षित लाभ नहीं मिल पा रहा है, और गैर-टैरिफ बाधाएं व्यापार के लिए एक महत्वपूर्ण चुनौती बन गई हैं, जिनमें मानकों का अनुपालन और जटिल प्रक्रियाएँ शामिल हैं।

Main Points In English(मुख्य बातें – अंग्रेज़ी में)

Here are the main points from the provided text:

1. Bilateral Trade Agreements Under Review: India has bilateral trade agreements with 14 countries or economic blocks, but four significant agreements are currently under review or require revision due to shortcomings in their implementation and benefits.

2. Impact of Recent Agreements: The India-UAE Comprehensive Economic Partnership Agreement (CEPA) has led to a significant increase in imports of gold and silver from the UAE, raising concerns about how effectively the agreement’s terms are being followed, particularly regarding the rules of origin.

3. Challenges and Dependence on Tariff Concessions: While tariff concessions have been granted, the actual benefits to India from these agreements have been limited, partly due to non-tariff barriers and stringent compliance requirements set by partner countries like Japan and South Korea.

4. Trade Deficits and Critiques: Despite entering these free trade agreements (FTAs), India has experienced increasing trade deficits with several countries, indicating that the expected benefits have not materialized as hoped.

5. Need for Policy Adjustments: Experts argue for the need to reassess and potentially revise tariff concessions and compliance rules to enhance India’s competitive edge in international trade, ensuring better alignment between India’s exports and the regulatory landscapes of its trade partners.

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Complete News In Hindi(पूरी खबर – हिंदी में)

Complete News In English(पूरी खबर – अंग्रेज़ी में)

India has bilateral trade agreements with 14 countries or economic blocs, but four of the most significant agreements have gone back to the drawing board for review and reform. Even a relatively recent agreement with the United Arab Emirates (UAE) is under scrutiny, indicating a lack of sufficient details before finalizing at least some of these agreements.

In some cases, the implementation of these agreements has shown that partner countries leveraged most benefits under preferential terms. For instance, since the India-UAE Comprehensive Economic Partnership Agreement (CEPA) was implemented 18 months ago, there has been a sharp increase in gold imports from the UAE, significantly affecting government revenue and domestic industries.

Had there been no review, the losses could have been substantial. However, during a recent joint committee meeting under the CEPA, the UAE agreed to enhance monitoring to ensure that origin rules are not circumvented. The agreement allows for unlimited duty-free imports of gold, silver, platinum, and diamonds into India over the coming years. In the first year of the agreement, silver imports from the UAE surged by 5,853%, and gold jewelry imports increased by 290%.

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Since the UAE is not a producer of gold or silver, the rise in exports is largely due to the lenient application of origin rules. While India did not seek amendments to the concessions given to the UAE, it left the issue of diamond trade unresolved in the agreement. Currently, India imposes a 5% duty on cut and polished diamonds, while raw diamonds enter duty-free. In the coming years, eliminating duty on diamonds will undermine the protection afforded to the domestic industry, which needs to be addressed.

India entered the FTA landscape in 2009 by signing agreements with South Korea and the Association of Southeast Asian Nations (ASEAN). It followed up with a CEPA with Japan in 2011. All three agreements are now under comprehensive review, as India believes it has gained less compared to its treaty partners.

Despite the challenges posed by these agreements, FTAs cannot be discarded due to significant stakes involved. Presently, India’s trade agreements include 26 countries, and discussions are ongoing for new FTAs with 45 countries, including the UK, the EU, Peru, and Oman. This will shift a considerable portion of India’s exports from the Most Favored Nation (MFN) route to preferential routes.

Within five years of the ASEAN trade agreement’s activation, India sought to review it, with discussions on the review scope first taking place in 2015. After several years, ASEAN finally agreed to a review in 2019, and by 2022, both parties committed to expanding the review’s scope, aiming to complete it by 2025.

In its agreement with South Korea, India received tariff elimination or concessions on 93.2% of tariff lines, with lower duties accepted on 83.8% of tariff lines. However, even post-implementation of CEPA, India’s trade deficit with South Korea surged by 220%, while the trade deficit with the rest of the world was at 132.2%. The trade deficit with Japan increased by around 140%, aligning with average growth trends.

Trade data indicates that exports surged by 123.9% and imports by 175.7% with ASEAN; with Japan, exports increased by 56.4% and imports by 98.5%; and with South Korea, exports enhanced by 89.1% and imports by 127.3% after the trade agreement. The data underscores the urgent need for a review with both ASEAN and Korea, although discussions with Japan have yet to gain momentum.

Experts suggest that India has not capitalized sufficiently on these FTAs because its tariff concessions are deeper compared to its partners, who already had lower tariffs. This has primarily boosted exports from ASEAN, Korea, and Japan. India’s export growth has been stunted as stringent standards, rules, and certification requirements imposed by Korea and Japan are expensive and deter many exporters. Estimates reveal that the utilization of FTA concessions by India stands at only 25%, starkly lower than the developed countries’ utilization of 70-80%.

According to industry insights, many Indian companies choose not to utilize FTA routes even when import duties are reduced because the compliance costs associated with FTAs do not justify the already low tariff benefits.

In the reviews of the FTAs with Japan, ASEAN, and Korea, one major issue is the need to simplify and increase the transparency of compliance with standards. Non-tariff barriers now play a significant role in global trade dynamics. According to the UN Conference on Trade and Development (UNCTAD), tariffs as a proportion of the total product value fell from 13% in 1999 to 7% in 2022, while non-tariff barriers rose from 53.4% to 71.97% in the same period.

Challenges related to improving access for Indian agricultural products like shrimp and rice, steel, pharmaceuticals, and services in ASEAN stem from strict standards and technical trade barriers. The compliance processes are so complex and arduous that they drive up costs and cause delays.

In the case of ASEAN, there is limited scope for imposing import restrictions to balance trade since a significant share of imports from ASEAN countries includes coal, machinery, equipment, edible oils, plastics, and electronics, which feed the local industries.

The evolution of trade with FTA partners is also explained by shifts in global trade dynamics and the varying performances of manufacturing sectors within ASEAN, Korea, and India. Over the past 15 years, Chinese investments have burgeoned in the ASEAN region.

Officials have pointed out that using these nations as a means for China to export to India presents a risk that is not easily manageable. Supply chains in ASEAN countries and China have deeply integrated over the last 15 years, with China’s import share from ASEAN rising from 10% to 30%, while India’s share has remained stable at 10%. Other nations’ shares have decreased in ASEAN imports.

The ASEAN FTA dictates that a minimum of 35% local value addition is necessary to benefit from the preferential tariff. Companies with Chinese investments that meet these criteria are likely to adhere to them.

“Current origin rules requiring a minimum of 35% value addition are adequately stringent to restrict imports. They must be implemented carefully,” said an industry expert.

While learning from the older FTAs will be advantageous for new negotiations, achieving a trade balance in existing FTAs will rely on boosting India’s exports and strict adherence to origin rules by partner countries.



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