India set to ink key trade deals by next year
India is set to conclude three major trade agreements with the United Arab Emirates, the United Kingdom and Australia by 2022, and is close to signing early harvesttrade deals separately with the three nations, three people aware of the development said.
The government has set aggressive timelines for the agreements as part of its ambitious target of $500 billion exports by the financial year to March 2023 – formalisation of a Comprehensive Economic Partnership Agreement (CEPA) with the UAE by early 2022, a free trade agreement (FTA) with the UK by next year, and an interim trade deal with Australia by December. These will be followed a year later by a Comprehensive Economic Cooperation Agreement (CECA), the people said, requesting anonymity.
The negotiations with the UAE are on a fast track. The first round of talks was held on September 23-24 in New Delhi during the visit of UAE minister of state for trade Thani bin Ahmed Al Zeyoudi. “The aim is to sign a formal CEPA in March 2022,” one person said.
“Both sides are serious about negotiating and concluding CEPA in line with the determination of the leadership of both countries,” a second person added. “Both sides are closely connected and working to achieve this agreement, which will complement the India-UAE strategic partnership.”
The agreement is expected to raise bilateral trade in goods to $100 billion and in services to $15 billion in five years. The UAE was India’s third largest trading partner with about $59.1 billion of bilateral trade in 2019-20, a largely non-Covid period.
India’s major exports to the UAE include refined petroleum products, minerals, cereals, sugar, fruits, vegetables, tea, meat, seafood, textiles, engineering, machinery products, and chemicals. It imports petroleum and petroleum products, precious metals, stones, jewellery, minerals, chemicals and wood products.
“India and the UK plan to launch negotiations on an FTA from next month in two stages – low-hanging fruits (early trade deal) by March 2022 on priority, followed by a comprehensive agreement,” a third person said. The tentative timeline for the FTA and other trade matters was chalked out during discussions between commerce minister Piyush Goyal and UK trade secretary Liz Truss last month.
The two countries also agreed to quickly finalise terms of reference so that negotiations can be launched in November, he said, adding rapid progress has been seen after an “Enhanced Trade Partnership” was announced by the prime ministers of both nations in May.
India has also revived CECA negotiations with Australia, which has tremendous potential, said the first person cited earlier.
“It is expected that the long-pending FTA negotiations with Australia may conclude by 2022 and an agreement could be signed thereafter,” he said. Australia and India launched negotiations for a CECA in May 2011, but talks were suspended in September 2015 after nine rounds because of differences on some multilateral issues.
Negotiations by the two countries were “relaunched in June last year and an aggressive timeline” was agreed at the India-Australia joint ministerial commission meeting between Goyal and his Australian counterpart Dan Tehan on September 30, he said.
Tehan said the aim is to have an interim agreement covering goods, services, investments, rules of origin, phyto-sanitary measures for fruits and vegetables, and mutual recognition of qualifications in place by December this year, to be followed by a final agreement in December 2022. He said the two sides are expected to make market access offers by the end of October.
“It’s going to be a challenge. These things are not easy,” Tehan said, acknowledging Indian concerns in areas such as dairy and agriculture. The market access offers will be a “difficult” aspect requiring hard work by both sides, he said.
Though both sides will have to make compromises, Australia can offer investments and technology to boost food and agricultural processing in India, Tehan said. Australia is also open to equitably handling the issue of domestic subsidies in agriculture, he added.
India has set an ambitious of exports target of $450-$500 billion by the next financial year and early harvest deals, along with full FTAs, will play a major role in realising this goal, the first person said. Besides the three most prospective FTAs, New Delhi is negotiating trade deals with other countries and blocs. They include Oman, Canada, the European Union, Russia, and the Southern African Customs Union (SACU), which comprises Botswana, Lesotho, Namibia, South Africa, and Swaziland.
Speaking at a midterm review meeting of export promotion councils (EPCs) on Saturday, Goyal asked the bodies to raise trade-related concerns faced in these countries so that the government can address them while negotiating individual FTAs. He said such issues were mostly related to market access rather than tariffs.
Goyal said India is on the right track as its exports touched $197 billion in the first half of the current financial year. “Our exporters have made all of us Indians proud today,” he said in a statement, adding “if we can aim to scale $450-$500 billion exports next year”.
Nilaya Varma, co-founder and CEO of consultancy firm Primus Partners, said: “UAE, UK, and Australia are three key economies, and India’s old allies. Trade negotiations with them in both goods and services have progressed very well and signs of early harvest deals are visible, which will finally culminate into comprehensive FTAs. It’s a win-win for both India and its partners.”
Meanwhile, commerce minister Goyal met ministers of at least 15 countries on Monday on the sidelines of the G20 Trade Ministers Meeting in Sorrento, Italy, a government spokesperson said.
He clarified India’s trade position and engaged in bilateral and multilateral negotiations with the ministers of the US, the UK, the EU, Brazil, China, Australia, South Africa, Indonesia, Canada, South Korea and Mexico, among others, the official said.
At the meetings, Goyal also asserted India’s position for the forthcoming Twelfth Ministerial Conference (MC12) of World Trade Organization (WTO) to be held in November at Geneva in Switzerland. Goyal said the multilateral trade deal must be “just and equitable” and “historical wrongs against developing countries must be corrected” rather than being carried over, the official cited above said.