Buoyed by the swift conclusion of free trade deals with the UAE and Australia this year, India has stepped up efforts to clinch similar free trade agreements (FTA) with five other GCC countries, the European Union, Canada, the UK and Israel as the world’s sixth largest economy doubles down on securing its ambitious export target of $1 trillion by 2030.
Early this month, India, the fastest growing major global economy, marked a key milestone of surpassing $1 trillion in its global goods trade as exports grew at the fastest pace since 1989-90 to a record $418 billion, while imports scaled the $610-billion mark, also an all-time high.
India has started the scoping exercise of deciding the type of framework of FTA with GCC to provide jobs, growth and enhance the country’s economic trade between the two sides, Minister for Commerce and Industry Piyush Goyal said during his recent visit to the UAE.
According to ministry officials, New Delhi is set to begin deeper engagements with the GCC countries as early as May-June to finalise the FTAs. Goyal said he was very hopeful of concluding “a good, free trade, fair and equitable agreement” the rest of the GCC states that will provide opportunities for jobs, growth and boost India’s economic and trade ties with the region. The Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE, which will be operationalised on May 1, 2022, will open huge opportunities and businesses of both countries should look at taking the bilateral trade to $250 billion by 2030, he said.
In fiscal 2021, India imported goods worth $80.5 billion from GCC countries, while exports amounted to $40.5 billion. About half of this trade is with the UAE. India’s exports to the bloc in April-January FY21 amounted to $21.74 billion, of which the UAE accounted for $12.9 billion with the main items being mineral fuels, apparel, gems and jewellery, and electrical machinery. During the same period, India’s imports from the GCC were worth $45.7 billion, of which those from the UAE were to the tune of $19.65 billion.
The revival of GCC-India trade talks comes after a long gap. A Framework Agreement on Economic Cooperation between India and the GCC was signed in 2004 that provided for both the parties to consider ways and means to extend and liberalise trade relations besides initiating discussions on the feasibility of an FTA. Two rounds of negotiations were held —in 2006 and 2008.
Talks with the 27-nation E bloc on the proposed Broad-based Trade and Investment Agreement (BTIA), which have been stalled since May 2013 due to several issues, will restart from June.
India’s Commerce Secretary BVR Subrahmanyam has said the EU team would visit India for talks immediately after the ministerial meeting of the World Trade Organisation (WTO), which is scheduled from June 12-15. If the trade agreement comes through, then the EU will replace the US as India’s largest destination for garments.
Goyal said he has met a large EU delegation which expressed keenness to expand trade ties with India. He said India will also have a comprehensive pact with the UK and Canada after concluding an interim pact first. The interim agreement would serve as a frontrunner to clinching a more comprehensive FTA. The total trade between India and the UK stood at $24 billion in 2020.
India’s merchandise exports to EU member countries stood at about $57 billion in 2021-22 (April-February), while imports aggregated to $46.36 billion.
Pharma products, electrical machinery, vehicles, plastics, furniture and textiles are among the 14 product categories that the Confederation of Indian Industry (CII) has identified for India to clock $1 trillion merchandise exports by 2030. These would contribute over half of the target while the rest would be met with fuels and gems & jewellery, among others. The CII said that India requires a 14 per cent CAGR over 2022-2030 and its share in global exports must be pegged at 5.0 per cent in 2030 entailing 11x growth over 0.55 per cent share in 2019.
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