Govt-industry talks on proposed FTAs with EU-Australia at premature stage

Consultations with India Inc on trade pacts with UK, UAE on

At a time when India has already announced its intent to seal trade pacts with key exporting partners, industry participants said their discussions with the government regarding proposed trade deals with the United Arab Emirates (UAE) and the United Kingdom (UK) have already kicked off.

However, with respect to countries such as the European Union (EU), Australia, the discussion with industry is at a premature state and domestic players will get more clarity as and when the chief negotiators of both nations sit and discuss what can be offered.

“Industry consultation is going on not only through the department of commerce but other line ministries also are approaching the industry, with discussion mostly on the goods side and pertaining to the UK. We expect some progress in the coming months, with respect to talks with the UAE and UK,” an industry official said, citing anonymity.

In fact, pre-negotiation deliberations between India and the UK have already started.  India hopes to kick start FTA negotiations with the UK by the end of December. On Thursday, a joint statement by India and UK said that they agree to be ambitious in the forthcoming FTA negotiations.

As far as the UAE is concerned, India is aiming to finalize a comprehensive trade deal by December.  Representatives from sectors such as steel, textile, engineering products, gems and jewellery have been meeting with the government, on FTA-related consultations with respect to the UAE.

Last week, the Centre said that India and Australia are looking at finalizing an early harvest or a mini trade deal by December. It is learnt that the government will begin consultations with the industry within the next 10 days. “Negotiations between the both nations will also start soon,” a person aware of the matter said, adding that any investment agreement will be kept out of the deal, with the main focus being deepening of bilateral trade between the two countries.

In May, India and the EU had agreed to resume negotiations for balanced and comprehensive free trade and investment agreements. However, it is learnt that there hasn't been much progress on this front as the EU is yet to appoint chief negotiators and kickstart pre-negotiation talks with India.

Rahul Mehta, past president and chief mentor of Clothing Manufacturers' Association of India (CMAI), said that various stakeholder meetings are being called by the government. "(Any deal) with the EU will be a bit complicated with each country having its own requirements. India's FTA with the UK should come through fairly rapidly with the latter being equally interested. Australia should also be coming through soon," Mehta told Business Standard.

According to other textiles and clothing (T&C) industry sources, barring Japan, most of the FTAs were signed with non-consuming countries from the T&C industry's perspective. However, FTAs with the EU, the US, Australia, and the UK would be a win-win situation, they said.

The US recently indicated that it is not considering a new trade agreement with India.

India would look at working with the US on market access issues to promote bilateral trade.

Data collection exercise from the T&C industry has been going on for some years. So while no new data is to be gathered, government  officials are meeting with industry representatives and are coming across as ‘aggressive’ about signing at least some of these FTAs soon.

“We have made our stand clear that, as an industry, we want these FTAs to be signed soon since we are losing out to other manufacturing competing nations like Bangladesh who currently have a 10-12 per cent price advantage due to their concession agreement with countries such as the UK,” said another senior industry representative on condition of anonymity.

The industry is also trying to convince its buyers to initiate talks with their respective governments, said A Sakthivel, chairman of Apparel Exports Promotion Council (AEPC) and president of Federation of Indian Export Organisations (FIEO).

“The minister and officials are having frequent meetings and talks with the respective nations as well as industry councils in India. From our side, we have been trying to convince our buyers in countries like the UK, EU, UAE and Australia to work proactively with their respective governments for these FTAs. We hope these FTAs are done soon,” Sakthivel added.

On the other hand, the most ‘sensitive’ sector--dairy--is yet to hear from the government on the FTAs,  R S Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF), popularly known as Amul, said.

Prioritising mini trade deals

Experts and government officials said that signing mini trade deals can be a good strategy to begin with, before signing a full fledged deal. Till now, India has signed an early harvest deal with Thailand and Singapore.

“Early harvest agreement can be a good strategy because first of all it will help us to start the FTA in a limited way and over a period of time, as industries give more negotiating room to the government, the list can be expanded. We can start in a limited way. It sends a very positive signal to the industry” Ajai Sahai, director-general (DG) and chief executive officer (CEO), Federation of Indian Export Organisations (FIEO) said.