Commerce Ministry division to track FTA utilisation

NEW DELHI: India’s existing free trade agreements (FTAs) with partner countries are likely to be monitored by a separate division to be created in the Commerce & Industry Ministry. This division will keep track of the extent to which FTAs are being utilised by Indian industry and also identify non-tariff measures that are acting as hurdles.

“The Commerce & Industry Ministry is considering setting up a trade monitoring division that will monitor utilisation of current FTAs and the non-tariff measures taken by partner countries,” a Government Official said recently.

Tracking trade diversion

The division, if created, will also take note of the trade diversion taking place due to third Country FTAs and will give the Ministry some indication of whether an FTA needs to be explored with a particular Country or grouping.

It is to coordinate with the Directorate General of Foreign Trade, the Department of Revenue and the Directorate General of Commercial Intelligence and Statistics.

After India’s last-minute decision to exit the Regional Comprehensive Economic Partnership — a mega FTA being negotiated between 16 countries — the Government is focussing more on trying to understand how free trade pacts could work for India.

The RCEP included the 10-member ASEAN, China, Japan, South Korea, Australia, New Zealand and India.

As per various studies, including one carried out by the NITI Aayog, India’s utilisation rate for most FTAs is very low (between 4 per cent and 20 per cent). India’s existing FTAs with the ASEAN, Japan and South Korea, too, have worked out more in favour of the partner countries and has resulted in an increase in trade deficit with the countries.

It is evident that Indian industry can benefit from FTAs only when utilisation rate is improved.

“It will happen when there is more awareness about the pacts and also non-tariff barriers are removed,” the official said.

The proposed division is also likely to undertake outreach programmes to sensitise exporters on the utility of existing FTAs, the existing provisions and how to go about the paperwork required to get the entitlements.