Caution and optimism: on India's FTA with the United Kingdom
Although the Modi government has been quick to criticise the FTAs signed by the UPA for putting India at a disadvantage, some of its own FTAs have faced the same issue. The India-UAE CEPA (2022), for example, has seen India's trade balance worsen over the years. The FTA with Australia, too, has not resulted in gains for Indian exports. Indian farmer organisations — opposed to the U.K. FTA since talks began — are up in arms over the reduced tariffs on lamb and salmon and other edible products. Here, too, the government must act to ensure that India's farmers, already in a low-income, low-margin situation, are not elbowed out. Then, there is the fact that trade experts agree that the India-U.K. FTA will be the template for future agreements with the EU and the U.S. India must be careful here. While the U.K. is a relatively small trading partner, the EU and the U.S. deals — when they happen — will have a more significant impact. India has already cut import duties on several food and auto products in line with U.S. demands. With a less than 2% contribution to global exports, Indian manufacturing needs to be helped, not undermined.
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