Free trade agreements (FTAs) have become increasingly popular as countries look to expand their economies and boost international trade. India is no exception, with the country having signed multiple FTAs with various nations.
FTAs are mutually beneficial for countries, as they allow for easier trade and exchange of goods and services. FTAs typically involve the reduction or elimination of tariffs and other trade barriers, making it easier for businesses and individuals to engage in trade with each other.
India has signed multiple FTAs over the years, with its first being the India-Sri Lanka Free Trade Agreement signed in 1998. Since then, India has signed FTAs with countries such as Singapore, Japan, South Korea, Malaysia, and Thailand, among others.
One of the advantages of FTAs for India is that they provide access to new markets and consumers. For example, the FTA between India and South Korea has helped boost India`s exports of auto components and pharmaceuticals to South Korea, while increasing imports of parts for cell phones and other electronic goods. This has led to a win-win situation where both countries benefit from increased trade.
FTAs also help improve competitiveness for Indian businesses, particularly those in the manufacturing sector. By reducing or eliminating tariffs on imports of raw materials and other inputs, businesses can operate more efficiently and produce goods at a lower cost. This can improve their competitiveness in both domestic and international markets.
However, FTAs are not without their challenges. In some cases, FTAs can lead to job losses in certain industries, particularly those that are less competitive. For example, the India-Sri Lanka FTA led to a decline in India`s textile and apparel exports to Sri Lanka due to increased competition from Sri Lankan manufacturers.
Another challenge with FTAs is the potential for increased trade deficits. This can occur if imports from FTA partner countries grow faster than exports, leading to a net outflow of money. Additionally, some FTAs may not be as comprehensive as others, meaning certain sectors may not be included, leading to limited benefits for businesses within those sectors.
Overall, FTAs have proven to be a valuable tool for India to expand its economy and improve access to new markets. While there are challenges associated with FTAs, the benefits for businesses and consumers have often outweighed these drawbacks. As such, it is likely that India will continue to pursue FTAs with other nations in the coming years.