India will have to do away with its “fear psychosis” of entering into free trade agreements (FTAs) with other nations, as isolating the country by refraining from such trade deals will do it harm, Commerce and Industry Minister Piyush Goyal said Wednesday. While negotiations for a potential FTA with the United States and a larger trade deal with member nations of the Regional Comprehensive Economic Partnership (RCEP) bloc are on, India does not intend to compromise national interest and wrap up such deals without ensuring safeguards for its own industries, according to him.
“Like FTAs (which) where signed in the past with a forced deadline, our government will never do it. It will ensure sufficient, adequate safeguards for the Indian industry while also ensuring huge business opportunities for India, particularly when dealing internationally,” he said at the release of the High Level Advisory Group (HLAG) report on Trade and Policy at an event organised by Confederation of Indian Industry (CII).
The report states there is a need to “urgently” tackle the perception that India has not benefited from FTAs and that trade partners have instead grown at its cost, which is true for nations like Korea and Japan. “However, that speaks only half the truth,” stated the HLAG, which has recommended that India launch a five-year programme for negotiations of FTAs identified based on factors like long-term sustainability.
It has also recommended that India look at both tariff and non-tariff barriers in partner countries and that its negotiations on the services segment should go beyond focussing on movement of persons to also focus on commercial presence, “as Indian investors are interested in investing in the FTA partner country.” Apart from talking to the US on trade issues and negotiating with RCEP countries, Goyal said he would like to begin discussions “once again” with the EU and begin talks for a potential FTA with the UK post Brexit. “Ultimately, the government has to look at consumer interests and industry interests … If we look at things only from an individual perspective, we will be doing a lot of harm for India,” said Goyal, adding that “several” sectors are hurting because India does not have a more “open” economy.
“Don’t create a fear psychosis, which is unwarranted and unfair to the people of India … We have to explore new opportunities,” he said, adding “all” stakeholders would be taken into confidence before ratifying any agreement.
Goyal’s comments come ahead of the 35th ASEAN Summit, where RCEP negotiations are expected to be concluded and a deal potentially signed. RCEP is a mega free-trade deal negotiated between 16 nations — ASEAN members India, China, Japan, South Korea, New Zealand and Australia.
The HLAG — chaired by Surjit S Bhalla, who has recently been appointed Executive Director for India at International Monetary Fund — also recommended measures to boost exports by measures like enhancing the capital base of the Exim Bank by another Rs 20,000 crore by 2022 and a simpler regulatory and tax framework to attract more overseas investments both from individuals and funds. Bhalla is also a Contributing Editor with The Indian Express.
The panel also reiterated in its report an earlier recommendation on implementing elephant bonds — long-term sovereign bonds purchased by people declaring undisclosed income — to “help alleviate the dual problems of black money as well as funds for long term infrastructure.”