Free trade fails to boost exports, imports grow
According to the government, these agreements are meant to provide opportunities for exports to these trading partners at preferential duties.
Chennai: Free Trade Agreements (FTAs) have not benefitted India much. Exports to countries with whom India has entered into FTAs have grown by a meagre 10 per cent in FY19, while the imports have grown by 27 per cent. Imports as such are higher by 18.5 per cent compared to what we export to these countries.
The annual exports at preferential duties to trading partners under FTA grew from $97.7 billion in FY18 to $108 billion in FY19 - a growth of 10.5 per cent. On the other hand, imports fr-om these trade partners grew 26.73 per cent to $128.8 billion in FY19 fr-om $101 billion in FY18.
More worrying fact is that the trade deficit has only widened in FY19. If the deficit was 3.37 per cent in FY18, it grew to 18.5 per cent in FY19.
Asean countries account for the highest trade gap. While India purchases goods worth $59.3 billion from these countries, they buy only $37.5 billion valued goods. The imports grew faster at 25.9 per cent in FY19 compared to exports which grew only by 8.8 per cent.
"There is a huge list of products which enjoy duty concession as per the FTA with Asean. But when it comes to expo-rts, we do not have the competency to export many of the products in the list," said K. Unnikrishnan, deputy director general, Federation of Indian Export Organisations.
Of late, China has been routing many of its products into India through Asean countries. Many of the countries have not been following the rule of origin norms strictly.
The global slowdown and the trade war with the United States has only increased dumping of products by China.
"We also have been witnessing increased imports of processed commodities and food products from Malaysia and spices from Sri Lanka," he said.
FIEO is planning to study the pattern of imports from these countries and compiling a list of products that have an export potential. It also wants to take out delegations to these countries to promote exports.