Commerce and Industry Minister Piyush Goyal has stated that many more countries are interested in signing Free Trade Agreements (FTAs) with India, beyond those with which India is currently negotiating. Emphasizing India's strengths in demand, democracy, and demography, the Minister noted that India is expected to remain a young country for the next 30 years. Projecting an addition of $30 trillion to the Indian economy over this period, he conveyed a strong message to countries seeking FTAs with India: "Mere paas $30 trillion hai, aapke paas kya hai?" (I have $30 trillion; what do you have to offer?) As India's cross-border trade continues to grow, more countries are expressing interest in signing trade agreements. Following the successful Comprehensive Economic Partnership Agreement (CEPA) with the UAE, concluded in a record 88 days of negotiations in 2022, discussions on potential FTAs with several other countries have taken place. While negotiations are ongoing with the EU and the UK, India is also exploring opportunities to enhance trade with several Latin American countries. India began 2023 on the back of two trade deals with Australia and the UAE, signed in 2022. Having already signed an Economic Cooperation and Trade Agreement (ECTA), India and Australia are in talks to sign a Comprehensive Economic Cooperation Agreement (CECA), building on the five tracks agreed upon in the ECTA and exploring 14 new areas. Ten rounds of negotiations and inter-sessional meetings have already been held as part of CECA discussions. Talks on the India-UK FTA began on January 13, 2022, but repeated changes in the UK's leadership caused delays. Thirteen rounds of discussions have now been concluded, with 21 out of 26 policy areas finalized by the end of 2023. Following the formation of new governments in both countries, Commerce and Industry Minister Piyush Goyal held a virtual meeting with the UK's Secretary of State for Business and Trade, Jonathan Reynolds, on July 11, 2024, to discuss the way forward. This was followed by a physical meeting on the sidelines of the G7 Trade Ministers' meeting on July 16-17 in Italy. While negotiators from both sides are engaged in rigorous talks, several contentious issues are preventing the negotiations from being concluded. The UK is seeking duty concessions on Scotch whisky, which the Indian alcohol industry opposes. Vinod Giri, Director General of the Confederation of Indian Alcoholic Beverage Companies (CIABC), has called for a fair and equitable trade deal. He highlighted that India has offered a reduction in duty from the current 150% to 100%, and eventually to 50%. However, he acknowledged the difference in production costs between the two countries and advocated for a minimum import price mechanism to prevent under-invoicing. India's alcohol industry also seeks a level playing field, including the removal of the maturation condition in UK laws, which require whisky to be matured for three years. Other contentious issues include Rules of Origin, work visas for professionals, a Bilateral Investment Treaty, and duty concessions on electric vehicles. India's External Affairs Minister previously expressed hope for finding a mutually beneficial "landing point," but both nations remain determined to secure a deal that benefits their respective industries. Former Commerce Secretary Anup Wadhawan identified wines and processed items as "areas of ambition" for the UK but sensitive for India, calling for a balanced approach that respects India's sensitivities while addressing the UK's interests. Another pending FTA is with the European Union, where talks began as early as 2007 but stalled in 2013 due to differences over issues like customs duties on automobiles and alcohol products, and the movement of professionals. Negotiations on two chapters— Sustainable Food Systems and Small and Medium Enterprises—have been concluded, and the ninth round of negotiations is scheduled to be held in New Delhi from September 23-27, 2024. Core issues expected to be discussed include goods, services, investment, government procurement, rules of origin, SPS, TBT, and trade remedies. While talks restarted in 2022, the EU's primary concern remains investment protection, even after eight successful rounds of negotiations. Meanwhile, India has made it clear that it will not allow its industry to be undermined by the EU's proposed Carbon Border Adjustment Mechanism, or carbon tax. Former Commerce Secretary Anup Wadhawan emphasized that the carbon tax could render the FTA redundant if trade is undermined by the proposed tax. While several trade experts have advocated for an FTA with Africa, Latin America could also be a key region for India to deepen its trade partnerships. Talks on the India-Peru trade agreement are currently in the sixth round, and Chile is looking to increase its trade engagement with India, particularly in agriculture and allied sectors. India is also in discussions with the MERCOSUR bloc, comprising Brazil, Argentina, Paraguay, and Uruguay, to widen the existing Preferential Trade Agreement.
Source: CNBC
India and Australia held ‘intensive discussions’ on a wide range of issues, including goods, services and digital trade, and underscored the commitment to strengthen and enhance economic partnership during the 10th round of Comprehensive Economic Cooperation Agreement (CECA) negotiations between the two sides, an official statement said on Sunday. The talks were held from August 19 to 22 in Sydney. The negotiations also focused on areas such as government procurement, rules of origin and agri-tech. “The meeting saw intensive discussions and negotiations to narrow down the differences through better understanding of each other’s proposals and the way to bring in convergence. Efforts were made by both the sides keeping in mind the domestic sensitivities for reaching a balanced outcome,” the statement said. The two sides also reviewed the bilateral trade and investment relations and underscored commitment to strengthen and enhance the economic partnership between India and Australia. “Both sides made efforts to ensure that the CECA negotiation delivers meaningful benefits and balanced outcomes for both sides,” it said. This was the first round of talks since the conclusion of the general elections in New Delhi in June. The 10th round of negotiations were held after a gap of around five months from the previous round. However, intersessional meetings were held between these two rounds to bring in convergence on key issues. The next round of India-Australia CECA negotiations is likely to be held in November in India. In June, Business Standard had reported that Australia is pushing to conclude the CECA negotiations with India in the next six-seven months, as the country’s federal election is scheduled for May, 2025. The proposed comprehensive trade deal envisages covering five broad areas, including goods, services, digital trade, government procurement, product specific rules under rules of origin chapter. Both sides have shown interest in the inclusion of new areas in the comprehensive trade deals, such as competition policy, micro, small and medium enterprises (MSMEs), gender, innovation, agri-tech, critical minerals, and sports. CECA negotiations began in February 2023, nearly two months after the signing of the interim trade agreement also known as Economic Cooperation and Trade Agreement (ECTA). Both countries had signed ECTA in April 2022, which kicked in later during the year– from December 29.
Source: Business Standard
India and Australia held discussions on a wide range of issues, including goods, services and digital trade, during their tenth round of negotiations for a Comprehensive Economic Cooperation Agreement (CECA), the government said Sunday. The August 19-22 talks were held in Sydney in the areas of goods, services, digital trade, government procurement, rules of origin and agri-tech, according to the commerce and industry ministry. The next round of talks for the CECA are expected to be held in November. "The meeting saw intensive discussions and negotiations to narrow down the differences through better understanding of each other's proposals and the way to bring in convergence," the ministry said.
Source: Economic Times
India's textile industry is on the brink of expansion, with total textile exports projected to reach USD 65 billion by FY26, according to Invest India. Invest India posted on X, "PM Modi's bold 'fibre to fashion' vision is guiding the textile industry to become a driving force in the global market while bringing competence & technology to local players." According to Invest India, the domestic textile market, valued at around USD 165 billion in 2022, includes USD 125 billion from domestic sales and USD 40 billion from exports. Projections indicate that the market will grow at a compound annual growth rate (CAGR) of 10 per cent to reach USD 350 billion by 2030. In addition to its textile achievements, India has emerged as the second-largest manufacturer of personal protective equipment (PPE) globally. With over 600 certified PPE-producing companies, India is well-positioned in a market expected to exceed USD 92.5 billion by 2025, up from USD 52.7 billion in 2019.
Source: Economic Times
Any change in international commodity prices is a matter of concern for India's interest rate setters as a relatively benign global environment has provided breathing space to local policymakers amid stubborn domestic food price pressures, Monetary Policy Committee member Shashanka Bhide said. As his term at the MPC draws to a close, Bhide expressed hope that the new members of the panel would have the benefit of updated weights in the Consumer Price Index basket. Edited excerpts of an interview with Bhaskar Dutta: As you have pointed out in the latest MPC minutes, the RBI's surveys of urban households continue to show an uptick in inflation expectations. Are high food prices posing a risk of more generalised inflation, going ahead? Persistent high food inflation poses a risk. We have benefited from relatively favourable international commodity price conditions. Any change in the energy and other input price scenarios would be a concern. In the latest MPC minutes, you have flagged that private investment indicators continue to show a mixed trend. When could we see a sustained pick-up in private investment? Unfortunately, there is not enough information on investment spending in the public domain. What we have from the National Accounts quarterly data is only the aggregate level capital formation. The information available from the corporate sector refers to spending on fixed assets. The pattern of private investment till 2022-23 shows that the growth of investment spending had declined. Data on infrastructure, construction and import of capital goods in 2023-24 reflect a momentum similar to 2022-23. Going forward, acceleration in consumption demand and exports would provide the impetus to investments.
Source: Economic Times
Finance Minister Nirmala Sitharaman; Commerce and Industry Minister Piyush Goyal; External Affairs Minister S Jaishankar; and Railways, Electronics, and Information and Broadcasting Minister Ashwini Vaishnaw will on Monday attend a key meeting that aims to strengthen bilateral ties between India and Singapore. The second India-Singapore Ministerial Roundtable (ISMR) is scheduled to be held in Singapore. The meeting will enable both sides to review various aspects of their strategic partnership and identify new avenues to further elevate and broaden it, an official statement said on Sunday. ISMR is a mechanism established to set a new agenda for India-Singapore bilateral relations. Its inaugural meeting was held in New Delhi in September 2022. During their visit, the ministers will interact with their Singaporean counterparts and leadership. On Sunday, Goyal met leading global business figures in Singapore, including DBS Bank, Temasek Holdings, OMERS, Keppel Infrastructure, and the Owners Forum to explore strategies to bolster bilateral trade and investment. “Wrapped up a very fruitful day in Singapore today, with interactions and discussions with leaders of major global investment firms having over $500 billion of assets under management. Positioned India as an attractive investment destination and invited these multinationals to be a part of our development journey,” Goyal said on X. Singapore has been a major source of foreign direct investment (FDI) for India. In FY24, Singapore was the largest source of FDI for India, with an estimated $11.77 billion in inflows. The cumulative inflow of FDI from Singapore between April 2000 and March 2024 is around $159.94 billion. Singapore was the sixth largest global trade partner of India in FY24, with a total trade of $35.61 billion. This accounts for approximately 29 per cent of India’s total trade with the 10 Association of Southeast Asian Nations (ASEAN).
Source: Business Standard
The European Union (EU)’s insistence on sustainability measures such as deforestation rules and carbon tax on imports of steel, cement and hydrogen are akin to non-tariff barriers that can impede ongoing free trade negotiations with India, people aware of the development said. The next round of talks for the proposed India-EU free trade agreement (FTA) is scheduled for September 23-27, and New Delhi will simultaneously discuss sustainability measures such as the Carbon Border Adjustment Mechanism (CBAM) and EU deforestation regulation (EUDR) with the 27-nation bloc, two people with direct knowledge of the matter said on condition of anonymity. This will be the ninth round of talks on the FTA since the two sides relaunched negotiations in June 2022. Besides the FTA, negotiations were launched for an Investment Protection Agreement (IPA) and a Geographical Indicators (GIs) Agreement. The eighth round was completed in June, leading to the conclusion of two chapters so far — one on small and medium enterprises and the other on sustainable food systems. India is committed to environment protection and sustainability, the people said, citing Prime Minister Narendra Modi’s Lifestyle for the Environment (LiFE) initiative. India, however, is against making instruments such as EUDR and CBAM part of trade commitments because these are perceived as instruments of protectionism and act as non-tariff barriers (NTBs), one of the people said. The Indian side believes CBAM is a form of tax that can lead to tariffs of up to 35% on imports of high-carbon goods such as cement, aluminium, fertilisers, chemicals including hydrogen, iron and steel from India. CBAM will be levied on carbon intensive products to offset “carbon leakage” by importing high-carbon goods. Carbon leakage occurs when firms in the EU move carbon-intensive production abroad to countries, where less stringent climate policies are in place, or when EU products get replaced by more carbon-intensive imports. The tax is being implemented in phases from October 2023 and will become fully effective from January 2026. EUDR or the regulation on deforestation-free products covers production of commodities such as cattle, wood, cocoa, soy, palm oil, coffee, rubber and some of their derived products such as leather, chocolate, tyres and furniture. This demands certification from importers to prove their products didn’t originate from recently deforested land or contributed to forest degradation. EUDR will start to apply from December 30, 2024. The second person said: “The EU is India’s major market and mechanisms such as CBAM and EUDR would adversely impact the bloc’s exports.” Indian industry feels developed economies such as EU states are devising innovative ways to restrict imports from developing countries, and measures such as CBAM and EUDR violate World Trade Organisation (WTO) agreements. These regulations would make Indian exports uncompetitive in Europe, the first person said. EU ambassador Hervé Delphin recently told HT that CBAM is not an “instrument of protectionism” and described such concerns as a “misconceived fear”. He said if CBAM had been conceived for protectionist purposes, “it would have had a completely different design”. Delphin added, “CBAM has been designed as part of our climate agenda, of decarbonisation and sustainability.” He also said that India and the EU have a common interest in developing resilient supply chains at a time of “reconfiguration of global supply chains with an eye on the optimisation of sources”. At the same time, Delphin had acknowledged that the FTA negotiations will need a “strategic and political drive” as the talks are set to get harder. The EU is India’s second-biggest export destination with about $76 billion of merchandise exports in 2023-24. It imported goods worth more than $59 billion that year. The people cited above said an FTA deal with the EU would be difficult if it insists on such “unequitable” regulations, knowing well that India is making significant efforts towards green transition, which exceed its commitments at global forums.
Source: The Hindustan Times
The leading economic index (LEI) for India, a key measure of future economic activity, fell by 0.3 per cent in July, bringing the index down to 158.8, according to The Conference Board (TCB). This decline more than reverses the modest 0.1 per cent increase observed in June 2024. The LEI's growth rate over the six-month period from January to July 2024 also slowed significantly, registering just 1.5 per cent growth—half of the 3.2 per cent growth recorded from July 2023 to January 2024. In contrast, coincident economic index (CEI) for India, which reflects current economic conditions, showed more positive trends. The CEI rose by 1.1 per cent in July 2024, reaching 150.9. This increase partially offsets the 2.4 per cent decline seen in June. Over the six-month period from January to July 2024, the CEI rose by 2.8 per cent, though this is slightly lower than the 3.5 per cent increase recorded in the previous six-month period, as per TCB. “While still on an overall upward trend, the LEI for India fell slightly in July,” said Ian Hu, economic research associate at TCB. “Bank credit to the commercial sector, alongside merchandise exports, largely drove the decline against stock prices and the real effective exchange rate. Additionally, the six- and twelve-month growth rates of the LEI have softened somewhat in recent months.
Source: Fibre2fashion
The political turmoil and factory closures in Bangladesh may lead to several global buyers considering shifting their sourcing to other countries that may benefit Vietnamese textile enterprises, according to the Vietnam Textile and Apparel Association (VITAS). VITAS feels Vietnamese textile enterprises may receive new orders as Bangladesh’s production capacity is expected to decline during the peak season for winter clothing. Moreover, political unrest and rising labour costs due to demands for higher wages in Bangladesh are undermining its competitive advantage in cheap labour and eroding customer confidence, it notes. However, industry experts feel a massive order shift from Bangladesh to Vietnam is unlikely, according to Vietnamese media outlet. The extent of any shift will depend on several factors, including the nature of orders and the preferences of buyers. Bangladesh continues to enjoy significant cost advantages, including low labour costs, favourable interest rates and duty-free access to European Union (EU) markets. Bangladesh also offers energy subsidies to textile-garment exporters. Despite the potential short-term benefits, Vietnamese enterprises have been advised to focus on enhancing competitiveness and pursuing long-term strategies.
Source: Fibre2fashion
The United States has emerged as India's top trading partner in January-June this year, while the country has recorded its highest trade deficit of $41.6 billion with China during the period, think tank Global Trade Research Initiative (GTRI) said Friday. India exports goods to 239 countries of which 126 countries showed positive growth in exports. Imports from Russia grew to $34.4 billion from $30.8 billion, a 11.65% increase. It also said the country's merchandise exports rose 5.41% to $230.51 billion during the first half of 2024, led by sectors like iron ore, pharmaceuticals, precious stones, basmati rice, chemicals, and smartphones. Major countries with increased exports include the USA, UAE, the Netherlands, Singapore, and China. However, exports declined in 98 countries, which account for 24.6% of India's exports, with notable declines in Italy, Belgium, Nepal, and Hong Kong. In the first half of 2024, China remained the largest import supplier, with imports increasing from $46.2 billion to $50.1 billion. "India should continue to focus on increasing product quality and supply chain competitiveness. Since every big country is into inward mode, India should not surrender its policy space especially in new issues in free trade agreements and Indo-Pacific Economic Framework," said GTRI founder Ajay Srivastava. On the services front, exports grew 6.9% to $178.2 billion, while the imports rose 5.79% to $95 billion.
Source: Fibre2fashion
