'FTAs have caused more imports than exports'

India’s FTA with the Association of South East Asian Nations (ASEAN) has considerably benefited its two-way trade, with an increase of 33% in exports and 79% in imports The Dollar Business Bureau

FTA, Exports, FTA Impact on Exports, Economic Survey 2016, India-ASEAN Trade, India-ASEAN FTA, TPP Impacts in India

India’s 42 free trade agreements (FTAs) so far have resulted in more imports than exports, the Economic Survey 2015-16 released by Finance Minister Arun Jaitely on Friday revealed, outlining reasons such as the country’s greater tariff reduction as compared to its FTA partners. The survey underscored that the country needs to respond with measures, such as safeguard duty and anti-dumping duty to make progress on FTAs, in line with the World Trade Organisation, besides making a careful analysis of the FTAs as the country’s trade policies are wide-ranging. “Any reduction in tariff barriers should spur trade between partners, by offering greater market access for firms and encouraging specialisation within industrial subsectors. However, the impact of an FTA on the trade balance is unclear, as it may avor one region over the other. That’s because FTAs, in contrast to unilateral trade liberalisation, give rise not only to beneficial trade creation but also to trade diversion,” the Survey said. The country’s FTA with the Association of South East Asian Nations (ASEAN) has considerably benefited its two-way trade, with an increase of 33% in exports and 79% in imports. “The trade increases have been much greater with ASEAN than other FTAs and they have been greater in certain industries such as metals on the import side. On the export side, FTAs have led to increased dynamism in apparel, especially in ASEAN markets,” the survey said. Referring to the country’s future exports growth in the backdrop of the Trans-Pacific Partnership (TPP) which has not yet been ratified by its 12-member countries and the Trans-Atlantic Trade and Investment partnership (TTIP) which is being negotiated between the European Union of 27 communities and the United States, the Survey said that India’s exports will pick up marginally but the GDP growth rate will go down by 0.2%. Notwithstanding the global microeconomic outlook which has been marred by declining commodities’ prices particularly crude oil prices, turbulent financial markets and volatile exchange rates, India has managed to maintain a robust and steady growth rate in the financial year 2014-15 and 2015-16 so far, owing largely to its domestic consumption-driven economy. The country’s other macroeconomic indicators such as current account balance, fiscal deficit and inflation have shown a continuous sign of improvement. However, overall stagnation in the global economic growth has adversely impacted India’s exports so much that the country’s outbound shipments have fallen for the 14^th straight month in January this year.

February 25, 2016 | 04:00pm IST

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The Dollar Business Bureau - Feb 27, 2016 09:33 IST

'FTAs have caused more imports than exports'

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