- People in the know would concur that the free trade agreements were being aggressively contemplated by the Indian thinktank during the pre-pandemic days to not only stay relevant in the global world order to keep growing economically but also provide opportunities for the homebred businessmen to claim benefits of such arrangements by easy exchange of commodities. We all know how the pandemic put paid to those aspirations as every single economy took a severe beating. Needless to mention, India was no exception as the nation suffered immeasurably during the devastating Covid waves.
PC: KNN India
- Now that the world community is slowly picking up the threads of reverting to the pre-pandemic routine, the Indian think tank to is proceeding ahead with its strategies to further its economic interests by exploring ways to strengthen alliances. Against this backdrop, India recently wrapped up the free trade agreement with Australia soon after a deal with the United Arab Emirates sends global signals that its trade policy is moving into a higher gear. By showcasing Indian readiness to lower import duties on a range of goods and Australia’s willingness to ease mobility for professionals, this deal could give greater impetus to other FTA negotiations.
- Make no mistake, the emerging scenario is a win-win for both sides as the Indian industry gets cheaper access to raw materials like coal, aluminum, and metallic ores while Indian professionals secure liberal visa concessions. Further, Australian wines, wool, sheep meat, onions, almonds, and other horticultural products will benefit from tariff reductions as well. Most notably, India will reportedly highlight the mobility concessions for Indian professionals by Australia in its ongoing UK FTA negotiations. Also, this had hindered an EU FTA deal as well which the commerce ministry is targeting for a mid-2023 inking and will be an issue in any India-US deal going ahead.
PC: New America
- Mind you, there is no alternative to realistic give-and-take on market access. Here, the Australia FTA removes tariff disadvantages India suffered in merchandise exports of labor-intensive goods vis-à-vis China and Asean countries because of the Regional Comprehensive Economic Partnership (RCEP). Of course, leaning towards import substitution will blunt India’s export competitiveness over time. And it denies India cheaper components that reduce product manufacturing costs. Dairy products, rice, wheat, sugar, apples, and iron ore have been obviously excluded by Australia, evidently due to Indian politics, and industry sensitivities.
- The moot point to ponder over here is whether the FTA with Australia would in any way become deal-busters with other key countries/trade blocs. Hopefully, the answer here should be a decisive no. Remember, Russia’s invasion of Ukraine with its impact on energy and farm supply chains and altering of geopolitics calls for India to firm up trade agreements faster. Moreover, the India-Australia FTA may belong to the realm of trade, but it’s hard to miss the strategic considerations. The trade pact will eventually allow both sides to counter China’s dominance in the Indo-Pacific region. Hence, should not lose momentum to press ahead on this front.
