FTAs and Outward FDIS

Way forward to safeguard national interest in the Trump Era

- By Dr. Amlan Ray, Dr. Sushanta Kumar Mahapatra

Trump’s imposition of a 50% tariff on India has so far not had a major impact.

The Sensex remains above 80,000, India’s S&P rating has improved, and the national mood is upbeat with discussions about expected price slash of air conditioners and large-screen televisions due to GST reduction. However, more than 50% of Indian exports to the United States will be affected, particularly in labour-intensive sectors such as textiles and clothing, gems, and jewellery. The US GDP is almost one-fourth of the world's GDP, and tariff barriers in the US market are a significant concern for Indian manufacturers and exporters. There is an exemption for electronic items and the pharmaceutical sector, but the duration for the exemption is unknown, and the uncertainty continues.

Bilateral Trade Partners and FTAs

While the post-Trump era has ushered in a tariff war, India must look for new trade partners and increase the exchange of goods and services through strategic alliances. Free Trade Agreements (FTAs) and Regional Trade Agreements (RTAs) remain vital instruments, though often at odds with the “Most Favoured Nation” principle of the World Trade Organisation (WTO).