“It was a mistake to stay out of RCEP,” said Pradeep S Mehta, an experienced business analyst who has served on several World Trade Organization advisory boards. “If the government really changes the course of free trade, it would be welcome. It`s time. India hopes to restart negotiations on a free trade agreement with the UK after Brexit in January. Trade Minister Piyush Goyal said New Delhi hopes to conclude a free trade agreement with the UAE in early 2022. Earlier this year, India and the European Union decided to resume stalled negotiations on a comprehensive trade and investment agreement. Meanwhile, India has also begun talks with Canada on a free trade agreement and plans to conclude one with the Gulf Cooperation Council, a six-member group made up of Bahrain, Qatar, Saudi Arabia, Kuwait, Oman and the United Arab Emirates. Despite the potential benefits, India`s refusal to join the agreement was not entirely surprising. For decades, New Delhi has pursued highly protectionist economic policies as part of its historic commitment to an industrialization strategy that substitutes imports. It was only after an unprecedented financial crisis in 1991 that the country gradually began to dismantle a number of tariff barriers. Although India`s integration into the global economy has increased significantly over the past 30 years, New Delhi`s rhetoric in trade negotiations has remained largely protectionist.
And that tone intensified during Prime Minister Narendra Modi`s tenure, who focused on a “Make in India” strategy early in his term. More recently, even before the coronavirus pandemic shook the Indian economy, it announced a policy of economic autonomy – atmanirbhar in Hindi – to boost domestic industry. In a way, this policy was reminiscent of an earlier era when the pursuit of economic autonomy was an integral part of India`s development strategy. Turkey has concluded bilateral and multilateral agreements with: An interactive list of bilateral and multilateral free trade instruments can be found on the TREND Analytics website.  India and Australia have also agreed to conclude the long-outstanding free trade agreement by the end of 2022 and an early harvest trade agreement as early as December. Some aspects of India`s experience with free trade agreements have reinforced an ideological narrative about the importance of autonomy. Although the government`s own research has shown that India as a whole has benefited from the trade agreements it has signed in the past, critics have pointed out that India has negative trade balances with several RCEP member countries due to previous agreements. Critics have also linked deals such as free trade agreements with Japan, South Korea and ASEAN to lower production in India. Subrahmanyam Jaishankar, India`s foreign minister, recently argued that trade deals have led to deindustrialization, and while the minister did not mention some sectors, trade associations argue that industries such as electronics and light industry have suffered as a result of free trade agreements. It is undeniable that policy and regulatory reforms and efforts to build supporting infrastructure have not gone hand in hand with previous trade agreements and the limited potential gains from free trade agreements. One of the biggest complaints is that the lack of safeguards in previous free trade agreements has allowed for an uncontrolled influx of Chinese imports into India. In late June 2005, the government signed a comprehensive economic cooperation agreement with Singapore, which many consider to be India`s first “comprehensive” free trade agreement.
India also signed free trade agreements with ASEAN (2009), Korea (2009) and Japan (2010), which were later criticized for widening India`s trade deficit with the three trading partners. These contracts were followed by another signed with Malaysia (2011). India plans to improve its pact with Sri Lanka into a similar type of Comprehensive Economic Partnership Agreement. In addition to the legacies of the past, the two national political parties, the ruling Bharatiya Janata Party (BJP) and the main opposition party, the Indian National Congress, share a common distrust of the market economy, despite other important ideological differences. As a result, the BJP faced little hostility from its main political rival in rejecting the trade pacts. In fact, the negative tone of the narrative surrounding past free trade agreements, many of which were negotiated under the congress-led administration between 2004 and 2014, may have led the opposition to vehemently oppose RCEP. Currently, India shares privileged market access and economic cooperation through trade agreements with more than 50 countries. The following table lists the main bilateral and regional agreements that India has signed and implemented: this may change soon.
India and Australia are set to sign an “early harvest” agreement before the end of the month, paving the way for a broader free trade agreement (FTA) they plan to sign next year. Former Prime Minister Tony Abbott, now the Australian government`s trade representative, has hinted that India`s tariffs on his country`s wines could be lowered as part of the interim pact. Second, Indian politicians are also indebted to India`s vast agricultural lobby. Many Indian farmers believe, for legitimate reasons, that a rapid opening of the country`s markets to foreign agricultural products could put them at a significant disadvantage. Large-scale reforms could prove costly – wiping out even the small family farms that dot the country`s landscape. Dairy farmers are particularly opposed to granting market access to foreign producers because they fear competition from competitive and more industrialized dairy industries in Australia and New Zealand. By refusing to join RCEP, India could once again shoot itself in the foot, Chakraborty warned. The political slogans of Modi Make in India and Aatmanirbhar Bharat (independent India in Hindi) – calls to strengthen the country`s productive capacity – depend on an increase in foreign investment in the country.
But the 15 members of the rcEP will find it easier to relocate companies within the trading group because of common rules than to invest in an outside country like India, which risks losing future investments. The talks with Australia reflect a broader urgency that many experts say has so far failed the Indian government when it comes to agreeing to free trade agreements and a more open global trade regime. One of the main arguments against joining RCEP was the fear that China would allow better access to the Indian market without reasonable mutual benefits. But Mehta pointed out in an interview with Al Jazeera that even without RCEP, China is by far India`s largest source of imports. India and Australia began talks on a free trade agreement in 2011. A decade later, without this agreement, India remains a net importer of Australia. With the United Arab Emirates, things got worse. India was a net exporter until 2019-2020 – now it imports more than it sells to the Middle Eastern country. This growing gap between exports and imports seems to have prompted the government to rethink its approach, analysts say. The only free trade agreement India has signed in the past seven years was with the 10 members of the Association of Southeast Asian Nations (ASEAN) in 2015 – and the two sides had already completed most of the preparatory work before Modi took office.
In November 2019, India left the Negotiations on the Regional Comprehensive Economic Partnership (RCEP), leaving the signature without New Delhi to a collective of the 10 ASEAN countries of China, Japan, South Korea, Australia and New Zealand. RCEP is the world`s largest trade agreement and comes into force in January. All this contrasts with the skeptical view with which Prime Minister Narendra Modi`s government took office in 2014, when it announced a review of all previous free trade agreements signed by India, arguing that some of them had not helped the country. There is no trade agreement between India and the United States. In April 2018, the United States initiated a review of the eligibility of India`s compliance with the Market Access criteria of the Generalized System of Preferences (GSP) and in March 2019 decided that India no longer met the criteria, thereby withdrawing India`s GSP status. .