Modi govt gives major push to free trade pacts as exports, job creation become critical

Modi govt gives major push to free trade pacts as exports, job creation become critical

The Modi government is giving a renewed push to conclude some of the pending UPA-era free trade agreements (FTAs) and even clinch some new ones. The aim is to achieve the $2 trillion export target by 2030, and address disruptions in global supply chains created by the pandemic and the ongoing Russia-Ukraine war.

In its first tenure (2014-2019), the Modi government was reluctant on clinching FTAs even as it sought foreign direct investment (FDI) by opening up all the UPA-era trade pacts for a review to increase its exports. The existing pacts, the government believed, only encouraged more imports.

But, with increasing strategic alignment with some partner countries, particularly Australia, France and the UK, India is now focused on enhancing economic ties too, which has also been a demand of the partner countries, official sources told ThePrint.

According to the sources, yet another reason why the government is giving a renewed push to the pending pacts is the emergence of several minilateral arrangements in the wake of the pandemic — a trend accelerated by the Russia-Ukraine war.

Sources said India, which is not part of any mega-trade pact like the Regional Comprehensive Economic Partnership (RCEP), is now increasingly entering minilateral arrangements but there is no assured market access under such frameworks, and they are mostly focussed on ensuring smooth operation of supply chains by maintaining a security framework.

The Modi government is now going full throttle on negotiating some of the key FTAs by fast-tracking negotiations with the partner countries. All ministries concerned — Finance, Commerce as well as External Affairs — have been tasked by the Prime Minister’s Office (PMO) to clinch these deals at the earliest, the sources added.

In August last year, Prime Minister Narendra Modi gave a mandate to all Indian missions abroad to look for ways to help augment Indian exports to countries where they are based.

An official said the war has now “accentuated trade problems”, giving rise to risks such as food insecurity and high cost of energy. As a result, India is now hastening the process of FTAs so that it can lead to robust trading ties with friendly countries.

Among other things, this has been done with an eye on China. Notwithstanding the border tensions, Chinese imports to India reached nearly $100 billion in 2021. (Courtesy The Print)

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