India has been talking free trade agreements with several partners – both bilateral and regional – in a bid to boost export-oriented domestic manufacturing.
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These FTAs cover a wide array of topics, such as tariff reduction impacting the entire manufacturing and the agricultural sectors; rules on services trade; digital issues such as data localization; intellectual property rights that may have an impact on the accessibility of pharmaceutical drugs; and investment promotion, facilitation, and protection. India has signed 13 FTAs in the last five years with its trading partners, including the India-Mauritius Comprehensive Economic Corporation and Partnership Agreement (CECPA), India-UAE Comprehensive Partnership Agreement (CEPA – in effect from May 2022), and India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA – in effect from December 29, 2022). India is actively negotiating with the UK, Canada, EU, and Israel to conclude FTAs.
| India’s Trade Agreements: Grouping, Type of Arrangement, Status | |||
| Grouping | Number of member countries | Member countries | Type of agreement, stage of implementation |
| Asia-Pacific Trade Agreement (APTA) | 7 | India, Bangladesh, China, South Korea, Sri Lanka, Lao PDR, Mongolia | The preferential regional trade agreement, in effect |
| India ASEAN Trade in Goods Agreement (India-ASEAN TIG) | 11 | Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, and India | Free trade agreement (FTA), in effect |
| Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Cooperation (BIMSTEC) | 7 | Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan, and Nepal | FTA, under negotiation |
| Global System of Trade Preferences (GSTP) | 42 | Algeria, Argentina, Bangladesh, Benin, Bolivia, Brazil, Cameroon, Chile, Cuba, the Democratic People’s Republic of Korea, Ecuador, Egypt, Ghana, Guinea, Guyana, India, Indonesia, the Islamic Republic of Iran, Iraq, Libya, Malaysia, Mexico, Morocco, Mozambique, Myanmar, Nicaragua, Nigeria, Pakistan, Peru, Philippines, Republic of Korea, Singapore, Sri Lanka, Sudan, Thailand, Trinidad and Tobago, Tunisia, the United Republic of Tanzania, Venezuela, Vietnam, Zimbabwe, and Mercosur. | PTA, in effect |
| South Asia Free Trade Agreement (SAFTA) | 7 | Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka | FTA, in effect |
| India-Nepal Treaty of Trade | 2 | India, Nepal | Specified duty-free access to the Indian market on a non-reciprocal basis, in effect |
| India Sri Lanka Free Trade Agreement (ISLFTA) | 2 | India, Sri Lanka | FTA, in effect |
| India Mauritius Comprehensive Economic Cooperation and Partnership Agreement (India-Mauritius CECPA) | 2 | India, Mauritius | CECPA, in effect |
| India-Malaysia Comprehensive Economic Cooperation (IMCECA) | 2 | India, Malaysia | CECA, in effect |
| India Singapore CECA | 2 | India, Singapore | CECA, in effect |
| Grouping | Number of member countries | Member countries / participating states | Type of agreement, stage of implementation |
| Japan-India Comprehensive Economic Partnership Agreement (JICEPA) | 2 | India, Japan | CEPA, in effect |
| India Korea CEPA (IKCEPA) | 2 | India, South Korea | CEPA, in effect |
| India EU Broad Based Trade and Investment Agreement (BTIA) | 28 | India and the EU (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden) | FTA, under negotiation |
| India Israel FTA | 2 | India, Israel | FTA, under negotiation |
| India Canada CEPA | 2 | India, Canada | CEPA, under negotiation |
| India Peru FTA | 2 | India, Peru | FTA, under negotiation |
| India Chile PTA | 2 | India, Chile | PTA, under negotiation |
| India New Zealand FTA | 2 | India, New Zealand | FTA, under negotiation |
| India Australia Comprehensive Economic Cooperation Agreement | 2 | India, Australia | ECTA, operational since December 29, 2022 |
| India UK FTA | 2 | India, UK | FTA, Under negotiation |
| India UAE Comprehensive Economic Partnership Agreement | 2 | India, UAE | CEPA, operational since May 1, 2022 |
The signing of the ASEAN-India Trade Area (AIFTA) paved the way for the creation of one of the world’s largest free trade area markets, creating opportunities for over 1.9 billion people in ASEAN and India with a combined GDP of US$4.8 trillion. The agreement set off tariff liberalization on over 90 percent of products, including palm oil, pepper, black tea, and coffee.
The Asia Pacific Trade Agreement (APTA), also known as the Bangkok Agreement, includes Bangladesh, India, Lao, China, Mongolia, South Korea, and Sri Lanka. APTA’s key objective is to hasten economic development among the participating countries. The trade and investment liberalization measures covering merchandise goods and services aim to contribute to intra-regional trade and economic strengthening.
The India-Japan Comprehensive Economic Partnership Agreement (CEPA) removes duties on almost 90 percent of products traded between the two countries. Sectors that have benefited from the lower duties include textiles, pharmaceuticals, agricultural products, tea, petrochemical and chemical products, cement, and jewelry.
South Korea reduced tariffs on 17 Indian products, while India reduced import tariffs on 11 items. The agreement eases restrictions on foreign direct investments for both countries and will provide better access for the Indian service industry, such as IT, engineering, and finance, in South Korea.
The two countries have reduced or eliminated tariffs on several items. The trade agreement also eliminates tariff barriers, double taxation, duplicate processes, and regulations and provides unhindered access and collaboration between the financial institutions of Singapore and India.
South Asian Free Trade Area (SAFTA) aims to reduce customs duties on all traded goods to zero. SAFTA categorized Bangladesh, Bhutan, Maldives, and Nepal as Least Developed Contracting States (LDCs) and India, Pakistan, and Sri Lanka as Non-Least Developed Contracting States (NLDCs). The SAFTA Agreement provides for a phased tariff liberalization program (TLP) under which, in two years, NLDCS would bring down tariffs to 20%, while LDCS will bring them down to 30%. Non-LDCS will then bring down tariffs from 20% to 0-5% in 5 years (Sri Lanka 6 years), while LDCS will do so in 8 years. NLDCs will reduce their tariffs for L.D.C. products to 0-5% in 3 years. This TLP would cover all tariff lines except those kept in the sensitive list (negative list) by the member states.
The India-UAE CEPA is likely to benefit about US$ 26 billion worth of Indian products that are subjected to 5% import duty by the UAE. Overall UAE is offering elimination of duties on 97 % of its tariff lines corresponding to 99% of imports from India. 90% of India’s total exports to the UAE in value terms would become duty-free immediately upon entry into force of the CEPA. The UAE’s immediate zero-duty market access offer to India covers all labor-intensive sectors such as gems and jewelry, textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, pharmaceuticals, medical devices, and Automobiles. UAE can also become a hub for sourcing India’s capital goods and intermediates for further value-added exports to other destinations in Africa and Europe. Also, for the first time in any Trade Agreement, a separate Annex on Pharmaceuticals has been incorporated to facilitate access to Indian pharmaceutical products, especially automatic registration and marketing authorization in 90 days for products approved by developed country regulators, namely the United States (USFDA), the United Kingdom (UKMHRA), the European Union (EMA), and Japan (PMDA).
Australia’s parliament ratified the India-Australia Economic Cooperation and Trade Agreement (ECTA) on November 22. Under the India-Australia ECTA, duties on 100 percent tariff lines will be eliminated by Australia, covering 6,000 broad sectors. Meanwhile, India’s tariffs on 90 percent of Australian goods exports, including meat, wool, cotton, seafood, nuts, and avocados, will be removed. Exporters, businesses, workers, and consumers in both markets are set to benefit from the trade liberalization, market opening, and freer movement of people. Implementation of the trade agreement will create an estimated one million jobs as a boost in business is expected in several labor-intensive industries, including textiles and apparel, select agricultural and fish products, leather, footwear, furniture, sports goods, jewelry, machinery, electrical goods, and railway wagons.
Did You KnowAustralia will offer zero-duty access to India for almost 96.4 percent of exports by value. Presently, many of these products have a 4-5 percent customs duty imposed by Australia. .
