Layering is a term used in Money Laundering to define the process of hiding the source of illegal money by progressively adding legitimacy to it. Trade is the modern method of war and peace, where it is very likely that a hostile country may use seemingly fair deals to route otherwise not-allowed business and pursue hidden agenda.
In 2016, India served notices to 57 countries seeking termination of bilateral investment treaties (BITs). Further, in 2019, India pulled out of the Regional Comprehensive Economic Partnership (RCEP). The bold move was essential given China’s obvious dominance in the trade agreement and India’s unwillingness to open the gates of its market to Chinese producers who are known for subsidisation issues and dumping practices. Such advances become even more relevant today, as many states across the globe after having hit by the COVID pandemic and having experienced the US-China trade war ripples, are looking for alternatives and new deals and destinations.
Right after Prime Minister Narendra assumed the office in 2014, India began putting efforts to streamline trade relations with the rest of the world by overhauling its FTA strategy. It began with reviewing the existing FTAs with ASEAN (FTA for goods, 2010), Japan (2011), South Korea (2010), Malaysia (2011), Singapore (signed in 2005), Sri Lanka, and others. In 2015, as GoI signed pending agreements with ASEAN, it parallelly set up another committee, headed by the then-chief economic adviser Arvind Subramanian, to review the other existing FTAs, amid fears that unchecked pacts may be resulting in widening trade imbalances.
Reversing a seven-year freeze, Government of India spent the year 2021 in studying & fixing the flaws and flows in its international trade strategies and was able to align India’s trade trajectory by decluttering the issue of free trade agreements (FTAs). Though India had signed an FTA (CECPA) with Mauritius last year but the major move has just begun.
Building on the three pillars of trust, transparency and talent, India has signed ‘India-UAE Comprehensive Economic Partnership Agreement’- the first-ever trade pact with the Gulf Nation, which promises accelerated growth in both nations with goods trade projected to reach $100 billion in 5 years. The comprehensive trade agreement was signed during India-UAE virtual summit on Friday, February 18, 2022, in presence of Prime Minister Narendra Modi and Crown Prince of Abu Dhabi, Sheikh Mohamed bin Zayed Al Nahyan along with Deputy Supreme Commander of the UAE Armed Forces. The Indian side led by Minister for Commerce and Industry Piyush Goyal signed the path-breaking agreement with the UAE side led by Abdulla bin Touq Al Marri, UAE Minister of Economy. The agreement is being hailed for possibilities towards large scale employment generation in both countries.
Signing trade pacts alone cannot augment economic exchanges. Harnessing of true trade benefits has been backed with a chain of measures taken over the last couple of years such as introducing various ease of doing business reforms, incentivisation schemes like PLIs, rationalisation of duties, tightening the Rules of Origin (RoO) norms under FTAs (to keep in check the dumping of imports and re-routing of goods), promoting GI tagged products etc. Enormous efforts have also gone into promoting districts as export hubs by identifying products with export potential in each district. Major steps taken by the government to further boost imports include releasing of more than Rs. 56 crores against pending tax refunds of exporters, notifying Remissions of Duties and Taxes on Exported Products (RoDTEP) rates, Rebate of State and Central Levies and Taxes (RoSCTL) Schemes, and launch of Common Platform for Issuance of Certificates of Origin to facilitate trade and to increase FTA utilization by exporters.
Indeed, India seems to be ready now and is looking at FTAs with nations that have values of democracy, transparency and mutual growth. FTAs that are currently under negotiations are – with UK, Australia, EU, other Gulf Countries, Canada and Israel.
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