Indian Economy: Understanding the Impact of Free Trade Agreements
Recent development on India's Trade Policy and Export Promotion. Review source articles.
- •The Indian economy is poised to gain significantly from the recently signed free trade agreement (FTA) with the European Union, with Prime Minister Narendra Modi stating that the agreement will unlock numerous opportunities for Indian farmers, workers, and Micro, Small, and Medium Enterprises (MSMEs).
- •However, the major issues for the Indian side were automobiles and wines and spirits made in Europe, which have been subjected to a price barrier for imports and phased tariff reduction over 10 years.
- •This move is expected to boost bilateral trade and investment, with the Commerce Minister Piyush Goyal noting that the deal leverages the country's manufacturing prowess, service capabilities, and grassroots production directly into one of the world's premier consumer markets.
The Indian economy is poised to gain significantly from the recently signed free trade agreement (FTA) with the European Union, with Prime Minister Narendra Modi stating that the agreement will unlock numerous opportunities for Indian farmers, workers, and Micro, Small, and Medium Enterprises (MSMEs). However, the major issues for the Indian side were automobiles and wines and spirits made in Europe, which have been subjected to a price barrier for imports and phased tariff reduction over 10 years. This move is expected to boost bilateral trade and investment, with the Commerce Minister Piyush Goyal noting that the deal leverages the country's manufacturing prowess, service capabilities, and grassroots production directly into one of the world's premier consumer markets.
Key Provisions and Implications
The FTA has been designed to protect commercial interests, minimize market disruptions, and ensure an overall balanced and stable trading environment for exporters. About 85% of India's exports are out of the steel measures, with the arrangement allowing steel shipments in three buckets: a dedicated quota for India, a competitive quota, and access under the Authorised Use Scheme (AUS). This development assumes significance as the steel industry had expressed concerns that Indian steel exports would decline despite the FTA. The resolution over the UK's steel curbs also highlights the importance of safeguarding bilateral steel trade, with India and the UK reaching a consensus to protect and promote steel trade through a carveout under three categories — country-specific quota (CSQ), residual quota, and AUS.
- ▸The Right to Information Act 2005 has been instrumental in promoting transparency in trade agreements.
- ▸The PM-KUSUM scheme has been launched to promote the use of solar energy in the agricultural sector.
- ▸The Maneka Gandhi Judgment has been a landmark case in the protection of human rights.
- ▸The National Solar Mission aims to promote the use of solar energy in the country.
- ▸The Make in India initiative has been launched to promote manufacturing in the country.
Did You Know? The Indian government has set a target of increasing the share of manufacturing in the country's GDP to 25% by 2025, with the Make in India initiative being a key driver of this effort.
The Numbers That Matter
The Indian economy has been growing at a rapid pace, with the GDP growth rate expected to reach 7% in the current fiscal year. The government has also set a target of increasing the exports to $2 trillion by 2025, with the FTA with the EU expected to play a key role in achieving this target. The Foreign Trade Policy 2023 has been launched to promote exports and reduce the trade deficit.
Significance and What Changes Now
The signing of the FTA with the EU is a significant development for the Indian economy, as it is expected to boost bilateral trade and investment. The agreement is also expected to promote the use of solar energy in the agricultural sector, with the PM-KUSUM scheme being a key initiative in this regard. The National Solar Mission has also been launched to promote the use of solar energy in the country. The Right to Information Act 2005 has been instrumental in promoting transparency in trade agreements, and the Maneka Gandhi Judgment has been a landmark case in the protection of human rights.
Concepts Mentioned
Foreign Trade Policy 2023
The Foreign Trade Policy 2023 is a set of guidelines governing India's international trade. It holds significant importance for the country's economic growth. The policy aims to boost exports to $2 trillion by 2030.
Make in India
Make in India is a government initiative to promote domestic manufacturing. It aims to boost economic growth and create jobs. The program has led to investments in sectors like automotive and electronics.
National Solar Mission
The National Solar Mission is India's initiative to promote solar energy. It aims to reduce dependence on fossil fuels. Launched in 2010, it targets 100 GW of solar power capacity.
Maneka Gandhi Judgment
The Maneka Gandhi Judgment is a landmark Supreme Court decision. It established the right to travel abroad as part of personal liberty. The 1978 judgment ruled in favor of Maneka Gandhi, whose passport was revoked by the government.
PM-KUSUM
PM-KUSUM is a scheme to promote solar farming, mattering for UPSC as it relates to renewable energy and rural development. It aims to reduce dependence on fossil fuels. Launched in 2019, it is a key initiative under the Ministry of New and Renewable Energy.
Right to Information Act, 2005
The Right to Information Act, 2005, is a law granting citizens access to government information. It promotes transparency and accountability, enabling citizens to request and obtain information from public authorities. The Act applies to all government bodies.
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