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India can achieve greater market and product diversification by entering into more Free Trade Agreements (FTAs) with its trade partners and reviewing existing agreements to make them more favourable leading to higher exports.
Over the last 25 years, the country has significantly diversified its export destinations, but more than 40 per cent of India’s exports is still accounted for by only seven countries, according to the Economic Survey released by the Finance Ministry on Monday.
“India has been negotiating free trade agreements (FTAs) with several partners – both bilateral and regional – over the past many years with a view to promote India’s exports. A further push in this direction would help provide the institutional arrangements to, inter alia, diversify both products and destinations,” the Economic Survey pointed out.
Exports in April-December
India’s exports in April-December 2021 posted a 49.7 per cent growth (year-on-year) to $301.4 billion, but imports grew at a sharper rate of 68.9 per cent to $443.8 billion during the period, more than doubling the trade deficit to $ 142.4 billion. This is a cause for concern and underlines the need for greater efforts to boost exports.
The US remained the top export destination for India in April-November 2021, followed by United Arab Emirates and China. However, China’s share in India’s total imports reduced to15.5 per cent from 17.7 per cent in corresponding period a year earlier, reflecting increased diversification of India’s import sources, the survey stated.
Belgium replaced Malaysia and entered into the top ten leading export destinations during April-November 2021, with more than $1 billion worth of pearls, precious and semi-precious stones, and iron and steel shipped to the country.
Other countries among India’s top ten export destinations include Bangladesh, Hong Kong, Singapore, the Netherlands, the UK and Germany.
The survey took a note of the trade agreement negotiations initiated by India over the last few years, which include a Comprehensive Economic Cooperation Agreement (CECA) with Australia, a FTA with the European Union and Comprehensive Economic Partnership Agreements with with Canada and the UAE. “Negotiations are complete for agreement with UAE and at advance stage with Australia,” the Survey pointed out.
India also launched FTA negotiations with the UK in January 2022, which could double bilateral trade to $50 billion by 2030.
The country is trying to initiate negotiations on Mutual Recognition Agreements with the US for services such as nursing and accounting and discussions around it took place as part of the India-US Trade Policy Forum between Commerce & Industry Minister Piyush Goyal and US Trade Representative Katherine Tai.
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