Sailing through FTAs expected to be tougher for the coalition government

Experts say the Centre may face potential disagreements from the allies and the strong Opposition may add another layer of difficulties in sailing through the FTAs.
Image used for representational purpose.
Image used for representational purpose.

NEW DELHI: Implementation of free trade agreements (FTAs) with various countries that were on the cards could prove to be challenging for the coalition government, as per experts.

They say the Centre may face potential disagreements from the allies and the strong Opposition may add another layer of difficulties in sailing through the FTAs.

“Allies of the BJP may have disagreements over certain issues regarding the terms and conditions of the free trade agreements. Furthermore, strong Opposition may create hindrance in executing FTAs,” said Arun Kumar, former professor of Jawaharlal Nehru University (JNU). He is of the view that amid global slowdown, FTAs may not be very relevant and have not been as beneficial as expected. In addition, he said FTAs with ASEAN countries and Korea have not been advantageous for India with benefits being mostly one-sided.

“These are complex agreements with long-term consequences. Modi’s new government may take time to settle down before pushing through such complex international agreements,” Kumar stated.

India had a trade deficit with South Korea at $0.238 trillion. As per Delhi-based think-tank Global Trade Research Initiative (GTRI), India’s merchandise trade deficit grew by 302.9% with ASEAN and 164.1% with South Korea. This comparison is based on data from pre-FTA period (2007-09) and 2020-22. India had entered trade pacts with these countries in 2010-11. Exports to these countries rose at a lower rate than imports.

“The government is reviewing the FTAs which have not yielded gains for the country. FTAs, which have already been signed, will remain intact and going forward only those trade pacts will be considered which will be beneficial for India, irrespective of the fact whether it’s a coalition government or not,” a top government official said on the condition of anonymity. On the FTA front, there are no changes. Trade pact with Oman may be delayed by a few months as the new government may take some time to understand it...the fate of UK trade pact is linked to UK elections. Besides this, trade deal with EU is just midway. It is nowhere near conclusion.

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