Free-Trade Agreements (FTAs) Post-Pandemic

India's recent FTAs signify a strategic shift from focusing solely on tariffs to accommodating contemporary global trade dynamics.

Key Innovations in FTAs

• Inclusion of binding investment commitments from partner countries.
• Provisions for social security arrangements.
• Gradual opening of India's government procurement market to foreign firms.
• Market access for "sensitive" sectors like automobiles, with reduced tariffs in agreements such as with the UK.
• Quota-based market access for certain agricultural products like fruit and dry fruit.

Broad Architecture of Trade Agreements

Recent agreements and ongoing negotiations reflect India's recalibrated approach to global trade:

• Seven trade agreements signed since 2021, including significant pacts with the UK, Oman, New Zealand, Mauritius, UAE, Australia, and EFTA.
• Active negotiations with major economies such as the US, EU, Canada, Mexico, Israel, Eurasian Economic Union, Peru, and Chile.
• Focus on integrating investment, visa commitments, social security agreements, and government procurement access, supporting the integration of Indian firms into global supply chains.

Significant Investment Commitments

• EFTA's commitment to invest $100 billion creating 1 million jobs over 15 years, with provisions for market access withdrawal if investments do not occur.
• New Zealand's commitment of $20 billion in FDI, backed by a rebalancing mechanism.
• Shift in strategy to emphasize FDI due to low existing tariffs in developed countries.

Sectoral Changes: Auto, Alcohol, Agriculture

• Phased tariff reductions for automobiles and alcohol, maintaining protections for small cars and ensuring competition.
• Staggered duty reductions on wines to protect local industries.
• Quota-based access for select agricultural products in agreements with Australia and New Zealand.

Strategic Shift: Looking West

India's trade focus has shifted from an "East" focus to strengthening ties with Western, developed nations to align with global supply chains and standards.

• Adaptation to Western priorities like sustainability and labor standards.
• Flexibility in government procurement, first seen in the UAE agreement, and expanded in the India-UK Ceta.
• Commitment to provide UK businesses access to extensive tenders worth £38 billion annually.

Overall Strategy

• Integration strategy with Western countries focusing on investment commitments and reciprocal market openness.
• Social security agreements to facilitate labor mobility.
• Phased duty reductions in previously protected sectors to break trade barriers.
• Strategic opening of government procurement markets.

By embedding these elements in FTAs, India aligns its trade policies with development priorities, projecting itself as a reliable and long-term economic partner globally.