India to sign FTA with Eurasian countries in a year

A joint feasibility study is accepted by all five countries in the group, FTA to benefit India more

While the free trade agreement (FTA) with the European Union is lingering on for over a decade, India is all set to sign FTA with Eurasian countries (comprise Russia, Armenia, Belarus, Kazakhstan and Kirkistan) in a year.

Speaking at the curtain raiser event of CapIndia 2017, the second edition of the trade exhibition, Sunil Kumar, Joint Secretary, Department of Commerce, said, "The joint feasibility with the Eurasian countries has been accepted by all individual countries. Now, trade negotiation would start soon with all countries in the group."

The trade exhibition is being organized between March 21 and 22, 2017, jointly by Chemicals Export Promotion Council (Chemexcil), Chemical and Allied Export Promotion Council (Capexil), The Plastic Export Promotion Council (Plexconcil) and Shellac & Forest Products Export Promotion Council (Shefexil) under the aegis of the Ministry of Commerce.

The FTA with Eurasian countries is spearheaded by Russia with an aim to treble bilateral trade to $30 billion by 2025. The bilateral trade between India and Eurasia currently stands worth $10 billion.

Interestingly, India shares a wide trade deficit with Eurasian countries with an estimated export worth $2.5 billion as against import of $7.5 billion. Thus, the import from Eurasian countries into India is three times higher than exports.

India imports fertilizer, potash, chemical and engineering goods from Eurasian countries and exports traditional products like rice, coffee, tea, tobacco and defence equipments to name a few.

"India anyway imports products from Eurasian countries with a duty. Hence, the FTA with them will not affect India's imports. In turn, the FTA will waive import duty which means imported commodities would become cheaper," said Kumar.

He added further that India's exports of agricultural commodities and defence equipment would not get impacted either as their shipment from India anyway has no competition at all. "India would share a Comprehensive Economic Partnership Agreement (CEPA) type agreement with Eurasian countries, said Kumar.

Meanwhile, India had started the FTA negotiations with the EU in 2007 which faces uncertainty even after a decade. There is no final decision on FTA with the EU in sight following approved referendum on Britain's exit (Brexit) from the EU. Apparently, the speed of trade negotiations with the European Union is very slow.

Meanwhile, the government is in the process to review its exports targets due to unfavourable economic conditions globally. Earlier, the government had set an ambitious target of achieving $900 billion by 2020. Overall export from India was reported at $261 billion for 2015-16, a decline of 16 per cent from $310 billion posted in the previous financial year.

"We are experiencing first sign of revival with hope of a marginal growth in India's overall exports this year due to economic crisis across a number of global economies. But, the growth in India's exports is likely to spur in the financial year 2017-18," said Kumar.

Satish Wagh, Chairman, Chemexcil, said, "India needs to explore new markets including Latin America, the Far East and Central Asia for growth in exports of plastics, chemicals allied products."

India's overall export of plastics, chemicals and allied products was reported at $35 billion for 2016-17, a marginal increase from $34.5 billion in the previous year.