The new free trade agreements (FTAs) finalised by India in the last 5-6 years have been designed to provide comfort to long-term investors looking to invest in global supply chains in India, Commerce Secretary Rajesh Agarwal said on Thursday.
These pacts also provide investors access to USD 60 trillion market sitting back in India.
“The new FTAs, the modern FTAs that we have seen over the last five-six years, all of these are designed in a manner where it gives comfort to long-term investors to invest in a global supply chain in India,” Agarwal said here at a PAFI (Public Affairs Forum of India) event.
He added that predictability drives investments and the FTAs provide tariff predictability.
“….you are living in the world of global value chains and investments need predictability in terms of flow of goods also, because I need to import something from a region, I need to import the second thing from some other region, I need to add here and send it to maybe fourth region.
“Do I have predictability in terms of tariffs, in terms of processes, so that we are able to do it in the simplest manner. I think the FTAs provide that,” he added.
India has finalised trade pacts with the EU, UK, Oman, New Zealand, UAE, Australia and EFTA bloc.
Under the trade pact with European Free Trade Association (EFTA), India has received a USD 100 billion FDI commitment over 15 years. New Zealand too has committed to invest USD 20 billion in India under the deal.
He added these trade pacts help diversify exports basket.
“When you diversify your export supply chain, your basket is wide enough, I think you are de-risking. So what this free trade agreement does is to create an environment where our export supply chains can also get de-risked,” he said.
An exporter today can access regions like Asean, and also countries like Australia and New Zealand, the secretary said.
The tariff arbitrage is helping diversify exports.
“Since I am reaching the same product in ten markets, I am de-risking. So that is one way you can de-risk your exports, and that’s important for exports to grow in a sustainable manner,” he said.
