“India wants bilateral trade relations with countries with which it can increase its volume”

By Animesh Singh

New Delhi, Sep 12 (SocialNews.XYZ) As India has finalized several Free Trade Agreements (FTAs) with major countries like Australia and the United Arab Emirates, through which it aims to expand its exports while in seeking to improve its trade volumes, Veteran lawyer V. Lakshmikumaran, who has expertise in foreign trade policy issues outside of all areas of taxation, in an interview with IANS, explains why the India is bullish on these trade pacts and the way forward.

Here are some excerpts from the detailed interview.

Q: The Indian government has recently focused on FTAs. What do you think is the determining factor behind this?

A: Under the World Trade Organization (WTO) mechanism in 1995, there was more emphasis on multilateral agreements. Today, the main difference is that the global perspective, global needs and global trade are getting more attention. The government’s intention is now more on ‘Make In India’ and the attitude is inward looking. So, rather than waiting for WTO reforms to happen, India wants to consider bilateral trade relations with countries with which it can increase its trade volume.

Q: What safeguards should be kept in mind when finalizing FTAs ​​with other countries?

A: The main area of ​​focus of any trade agreement is to ensure that market access for Indian products is available in the country with which the agreement is being finalized. At the same time, however, market access must also be granted to their products in India.

In addition to this, it should also be seen that products and services related to which particular sector(s) can gain more market access in the other country. At the same time, however, it should be ensured that the Indian sectors are able to withstand the pressure and competition of goods from the trading country. Best practices should also be guaranteed by trading nations.

Q: Can trade pacts between India and other nations be negotiated in
Rupee terms? Will such agreements be beneficial for India?

A: Regarding currency, we have never had any trade agreements in rupee. If we put rupee trade as a precondition while concluding a bilateral trade agreement with a major country, the negotiations would not move forward. The Indian economy must manage locally to withstand the pressure of currency fluctuations.

Q: India’s current account deficit (CAD) is increasing, the rupee is depreciating as the focus seems to be more on imports than exports, which also leads to lower exchange rates. How can FTAs ​​address this imbalance?

A: The idea behind FTAs ​​is to increase exports in terms of goods and services, and the way we negotiated with the United Arab Emirates and Australia, this could not have happened without good bilateral relations. The idea is to see how market access for our products can be improved. So I would say that in my opinion, currency management is a domestic affair and should not be the main agenda of trade agreements.

Q: What needs to be done to safeguard Indian interests and ensure a level playing field in FTAs?

A: In any agreement, whether with developed or developing countries, we have to pay attention to the products entering the country, their impact on the market, the existing tariff rates and what the other country request.

We must avoid abuse of agreements and for this, strict rules of origin must be in place and only genuine goods must enter (India). We can also look at the type of market access with respect to the service industry. Also in modern agreements, a level playing field for orders (from India) is also supported.

Q: Should there be more focus on labor-intensive issues when negotiating such pacts?

A: There are chapters related to human-intensive sectors and small and medium-sized enterprises in trade agreements and governments have databases on countries with labor-intensive industries. Also, when negotiating such pacts, one has to be careful about allowing (a certain type of) goods to enter India. The government adopts a consultative process with line ministries and stakeholders before finalizing these (labour-focused) agreements.

Q: Are pacts with smaller countries disadvantageous for a large country like India?

A: Once we compete with the major countries with which our bilateral trade relations are good, we should also look at countries that can offer advantages in terms of geography and particular advantages in terms of labor and of material. etc The government would then have to make strategic decisions to enter into agreements with these nations.

Q: Is it necessary to revise old trade agreements to make them more relevant to changing times?

A: These systems are incorporated into trade agreements to ensure their relevance (keeping in mind the changing geopolitical scenario). For example, if a particular product floods our markets, there are safeguard mechanisms to address those issues. The government should continuously monitor the trade volumes of these countries and seek
any type of abuse or inconvenience. There are mechanisms built into trade agreements to address these aspects.

Q: When entering into trade pacts with countries that are close competitors, what aspects should you bear in mind?

A: The parameters and standards that India follows with developed or developing countries remain the same with all nations.

Q: How can aspects related to trade imbalances be addressed in FTAs?

A: The government, while negotiating with other nations, makes calculations and forecasts on what is likely to happen in the future. It is like legislation where the current situation and the foreseeable future are taken into account. There are built-in mechanisms through which we take unpredictable developments into account and review the situation.

Source: IANS

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