FTAs are for market access
India is going into hard negotiations with regional free trade agreements (FTAs) for its rapidly expanding domestic market and exploring all potentials for exports to the Asia Pacific region, a base of more than three billion people including 1.25 billion each in India and China.
Rashesh Shah, President of the Federation of Indian Chambers of Commerce and Industry (FICCI), underlined the need for hard negotiations given China’s subsidies and export rebates.
Shah wants market access.
The Indian government is taking all feedbacks from domestic industries, especially related to market access and visas, says Shah, appreciating the government’s listening policy.
Shah pointed out that the Indian-Association of South East Asian Nations (ASEAN) bilateral trade has grown significantly to over US$80 billion but was quick to add that it should be US$200 billion given the potential and strong interests from all stakeholders in working towards more open economies.
India has started a third review of the Comprehensive Economic Cooperation Agreement, an elaborate FTA with Singapore, which is also a good springboard to venture into the South East Asian markets.
India wants increase participations of services and professionals in the regional prosperity.
China is no doubt a big stumbling block in Regional Comprehensive Economic Partnership, a 16-country FTA.
India is stepping forward to join the RCEP, the world’s largest commerce and trade block in terms of over three billion people in the Asia Pacific region.
But it faces China as a big competitor in export markets, no matter how any other analyst looks at it.
Chinese subsidies and export-rebates are beyond imaginations and cannot be matched by developing countries to support the growth of their export-oriented industries.
India’s partners in RCEP recognizes the importance of the consumer-driven Indian market of 1.25 billion people. Going forward, the consumers’ spending is set to increase further along with the Indian economic growths.
China is already dominating the Asian markets and, if not the global, is in an escalating trade war with the United States, where President Donald Trump wants to protect the American industries.
Japan and South Korea, along with Australia and New Zealand already lined up for RCEP, are worried about the US-China tariff war.
To stay in business, the Japanese and Koreans have kept their specialized niche industries ahead of Chinese mass-production houses and factories where volume matters.
India is a preferred manufacturing and servicing partner for global industries for it has skilled force with global trade stakeholders offering to train Indians in more specialized sectors.
So, this means India will have to build skill capacity further and house niche industries that, just like the Japanese and Koreans, are ahead of the Chinese mass producers, industry observers believe.
Shah, who attended a series of ASEAN-led regional meetings, including the critical RCEP session that ensured India’s participation during the week-ended 1 September 2018, says New Delhi is closely monitoring every FTA as well as the RCEP.
But Shah also stressed that India should not stay away from regional FTAs as global trade pact are weakening.
Indian absence from FTAs will not be good from export-oriented industries.
The free trade landscape is fast changing and market access is utmost important given the freedom and ease of online information and knowledge sharing.
Shipments have become much easier now.
RCEP is in the hands of sharp and shrewd negotiators from Australia, China, Japan, New Zealand as well as ASEAN member countries, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, The Philippines and Vietnam.
India will have to field a strong team of negotiators. fiinews.com
