Trade policy could propose an FTA with the United States over five years


BENGALERU : The United States is among the major trading partners with which India will seek free trade agreements over the next five years with the aim of increasing its share of exports in world trade to 3% by by 2027, compared to 2.1% currently.

It is part of the five-year Foreign Trade Policy (FTP) vision 2022-2027, which is expected to be unveiled on September 30.

The United States is not currently in FTA talks with India.

During a recent visit to the United States, Trade and Industry Minister Piyush Goyal said that India would be “happy and willing” to negotiate a trade pact with the United States, provided that Washington decides to seek a new free trade partner. , as a policy, does not contemplate an FTA with a new partner.

India was discussing a mini trade deal with the United States to boost economic ties under the Trump administration. After concluding pacts with the United Arab Emirates and Australia, India is negotiating FTAs ​​with Canada, the United Kingdom and the European Union.

The Department of Commerce is of the view that if national sensitivities in various areas would be taken into account during the negotiations, India would adopt an accommodating approach in various areas of interest on the principle of reciprocity.

The government also plans to coordinate broad strategies with relevant ministries and departments to reduce non-essential imports, according to a Commerce Department presentation reviewed by the Mint.

The foreign trade policy will include three new chapters – on e-commerce, districts as export hubs and SCOMETs (dual-use goods for civil/industrial and military use) – thus giving them special importance. The e-commerce chapter will aim to offset some of the transaction costs and promote e-commerce exports from India.

The FTP will also aim to promote and diversify service exports beyond the US and European markets. “Given that the goal is $1 trillion for services exports by 2030, I hope there will be strategies for diversifying the service basket beyond IT/ITES in the FTP framework,” said Arpita Mukherjee, a professor at ICRIER.

A government official said, “The policy will facilitate coordinated action between states and missions abroad to formulate and execute trade promotion strategy. Emphasis will also be placed on developing cross-border e-commerce to boost e-commerce exports from India. »

The FTP would also likely extend the concessions of schemes such as Remission of Duties and Taxes on Exported Commodities (RoDTEP) and EPCG in case the transaction is settled in rupees and not just hard currencies like the dollar. or the euro. This is in line with the RBI allowing Rupee trading.

Over the next five years, the government will work to promote selected Indian brands and global champions in addition to promoting exports of pharmaceuticals, tea, coffee, goods and engineering services.

Ajay Sahai, Managing Director and CEO of the Federation of Indian Export Organizations (FIEO), said the emphasis on branding in the new FTP will not only help make India a supplier of goods and quality services, but “will also improve the realization per unit of exports and more importantly, move our exports away from the price-sensitive segment in which, with little exchange rate fluctuations, the activity is cornered by other country.”

Emailed queries to the Commerce Department on Thursday went unanswered until press time.

The new chapter on SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) aims to clarify the trade provisions relating to these dual-use items. Sahai said normal shipments of SCOMET products are usually blocked at customs due to a lack of clarity. “Clarification on SCOMET will be really helpful,” he said.

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