Trade agreements struck earlier taught us how to raise our game

Learnings from past deals have guided India's approach and it's now a question of the finer details

- HARSHA VARDHAN AGARWAL

India's trade policy is undergoing a significant transformation. Free trade agreements (FTAs) are increasingly being leveraged as a tool to boost exports, attract foreign investment and improve industrial competitiveness.

For decades, India had approached FTAs with caution. However, the new approach is characterized by economic complementarity, strategic alignment, reciprocity and far-sighted discourse.

Old FTAs, uneven gains: India's early FTAs with ASEAN, Japan and South Korea have not yielded the desired outcomes. Instead, the trade deficit with these countries has widened significantly. While the ASEAN-India Trade in Goods Agreement (AITIGA) of 2009 helped expand trade volumes, it also widened our trade deficit with ASEAN from $6 billion in 2009 to over $45 billion by 2022 (it's now at $38 billion).

Our experience has been similar with Korea and Japan; imports surged while exports stagnated, particularly in sectors where India had held a comparative advantage, like garments, pharma, etc.

These early agreements had several structural and design issues.

First, tariff concessions were asymmetrical (especially under the AITIGA), with India offering more liberal market access to all ASEAN countries, while Vietnam, Indonesia and Thailand opened up their markets through far fewer tariff lines than India did.