BITs need not be only a bitter pill for India

In the last 36 months, New Delhi has inked or upgraded over half a dozen free trade agreements (FTAs), with the UAE, Australia, European Free Trade Association, or EFTA (comprising Switzerland, Norway, Iceland and Liechtenstein), New Zealand, Oman, the UK and EU.

- BHARAT JOSHI

The timing is providential, as global supply chains fray and the World Trade Organization (WTO)’s dispute system remains paralysed, India’s FTAs have served as both, a shock absorber and a growth engine.

Global trade growth has slowed amid global volatility, yet India’s exports to its new FTA partners bucked the trend.

Post the Economic Cooperation and Trade Agreement (ECTA), India’s exports to Australia rose 14% while imports from there grew 15%. The Comprehensive Economic Partnership Agreement (CEPA) with the UAE delivered $84.5 billion in bilateral trade in FY24, a 15% increase from pre-CEPA levels.

And, as the Strait of Hormuz remains closed since March, the FTA with Oman can provide India respite, as the ports of Salalah and Duqm are outside Hormuz and remain accessible.

If the old FTAs were about tariffs, India’s new ones are about trust, standards, and technology. The India-EFTA TEPA pledges $100 billion in FDI over 15 years, and New Zealand has committed $20 billion in investment over a similar period. While governments made the commitments, the investments will need to come from the private sector. The hard part is facilitation — ensuring these investments lead to projects on the ground.