India's Free Trade Blueprint

The country has recently signed a few trade agreements and is vigorously pursuing pacts with the U.S. and the EU, among others. What will be their impact on the Indian economy and businesses?

- BY ASHUTOSH KUMAR

INDIA’S TRADE negotiation strategy and philosophy have undergone a sea change over the past couple of years. Commerce minister Piyush Goyal recently shared an interesting anecdote that highlights this course correction. It reveals how trade negotiations used to be fraught with lopsided terms, strain for Indian companies, and an unmindful-cum-aggressive push for deals with competing nations like China, and Southeast Asian countries, all of which were almost simultaneously vying for the global exports pie. This effectively defeated the purpose of having a bilateral trade pact.

The anecdote pertains to the Regional Comprehensive Economic Partnership (RCEP) negotiations—a China-led 15-nation trading block, comprising 10 ASEAN countries, and Australia, Japan, New Zealand, and the Republic of Korea. India began RCEP negotiations during the Congress-led UPA rule in May 2013. It pulled out of the talks in November 2019 on the back of multiple concerns, ranging from the lack of import surge safeguards (mainly from China) to market access for Indian firms, among others.

During the RCEP summit in Bangkok in November 2019, Prime Minister Narendra Modi announced the decision to opt out of the trading block, citing the negative impact on farmers, MSMEs, and the dairy sector. Goyal, who had taken over as commerce minister in June that year and was engaged in the negotiations, shared an interesting exchange with his Chinese counterpart amid the trade talks, which brought to the fore the hard-nosed diplomatic attitude with which China negotiates with India.