Preferential trade agreements

Description

While remaining committed to multilateralism, India, like many other countries, has negotiated a series of free trade agreements (FTAs), notably with trading partners in Asia. Since the mid-2000s, India’s FTAs have doubled to about 42 today. At a time of significant changes in the international landscape, including the emergence of mega-regional agreements involving major trading powers such as the United States, Japan and the European Union, this paper reviews the experience of a select group of India’s FTAs. Using updated data and methodologies, it finds that the economic impact is broadly in line with expectations: FTAs have led to increases in both imports and exports, although the rise in imports has been relatively greater. On average, an FTA increases overall trade by about 50 percent over a period of roughly four years. Among the agreements studied, the ASEAN FTA has had the most pronounced impact, possibly due to deeper tariff reductions undertaken by India. The results also indicate a stronger impact on metals in imports and textiles in exports. However, further research is required—particularly in the services sector—to arrive at a comprehensive assessment of the overall impact of India’s FTAs.

Publication Date

1-1-2015

Publisher

Ministry of Finance, Goverbment of India

Keywords

Trade agreement, Free trade agreement, FTA, Economic growth

Source Link URL

https://www.indiabudget.gov.in/budget2016-2017/es2015-16/echapvol1-08.pdf

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