The government is focused on maximising the utilisation of free trade agreements (FTAs) after securing preferential access to two-thirds of the global market through nine trade deals, commerce minister Piyush Goyal said on Thursday, even as India is on course to forge several more FTAs with major economies such as the US, Canada and Chile.
India-US trade deal awaits tariff advantage
Goyal, who is scheduled to visit the US later this month, said finalisation of the interim bilateral trade agreement (BTA) with Washington awaits a tariff structure that gives India a comparative advantage over its competitors.
India and the US finalised a framework for an interim BTA on February 2, but an agreement could not be signed after the US Supreme Court invalidated the legal basis for the preferential tariff Washington had offered.
“As soon as the US is able to give us the preferential rate in comparison to our competition, we will finalise the BTA and announce the final details,” Goyal said at a workshop on FTA utilisation.
Nine trade deals secure preferential market access
India has concluded nine FTAs under the Narendra Modi government, ensuring that each provides Indian exporters a comparative advantage in the respective markets, Goyal said. Since 2021, India has signed and operationalised FTAs with Mauritius, the United Arab Emirates (UAE), Australia, the European Free Trade Association (EFTA), Oman and the UK. FTAs with New Zealand and the EU are in the process of being operationalised, while the framework of an interim BTA with the US has been agreed, pending finalisation of the tariff architecture.
According to trade experts, India is facing several tariff actions by the US. A 10% tariff has already been imposed on several labour-intensive goods this July for alleged use of forced labour under Section 301, they said, requesting anonymity. The threat of another penal tariff is looming as the US has launched another Section 301 investigation into alleged excess industrial capacity. All such uncertainties must be resolved to conclude a fair, equitable and mutually beneficial trade agreement, they said.
More trade deals in pipeline with major economies
Apart from the India-US BTA, India is expected to conclude several bilateral trade deals over the next few months to couple of years, Goyal said, referring to ongoing talks with Canada, Mexico, Chile, Mercosur, the Southern African Customs Union (SACU), the Gulf Cooperation Council (GCC) and Israel. Referring to these potential trade deals, along with ongoing efforts to review and expand existing FTAs with ASEAN, South Korea and Japan, Goyal said such trade arrangements would secure greater market access and give India access to 75% of global trade at rates lower than those faced by its competitors.
Government officials, who did not want to be named, said India is very close to finalising a Comprehensive Economic Partnership Agreement (CEPA) with Chile, a country rich in critical minerals.
