A new government is expected to be in place soon, with the long election process coming to an end next week. An important issue for the government will be economic growth, while bilateral and regional relations will remain an important factor for the next commerce minister.
Both the Congress and Bharatiya Janata Party (BJP) have, over the last many years, been in favour of building stronger bilateral and regional ties through comprehensive agreements that cover trade and investment flows.
A significant achievement of the Atal Bihari Vajpayee government on regional co-operation, was the Framework Agreement on Comprehensive Economic Cooperation signed with 10 members of the Association of Southeast Asian Nations (Asean) in Bali, in October 2003, as part of a "look east" policy. This agreement has been one of the biggest trade agreements for India in the recent past. It actually set the ball rolling on several other agreements, including the ones with South Korea and Japan.
The BJP has stated in its manifesto that "the vision is to fundamentally reboot and reorient the foreign policy goals, content and process, in a manner that locates India's global strategic engagement in a new paradigm and on a wider canvass, that is not just limited to political diplomacy, but also includes our economic, scientific, cultural, political and security interests, both regional and global, on the principles of equality and mutuality, so that it leads to an economically stronger India, and its voice is heard in the international fora."
The manifesto further states that the party "will work towards strengthening Regional forums like SAARC and ASEAN" as also continue India's "dialogue, engagement and cooperation, with global forums like BRICS, G20. IBSA, SCO and ASEM. States will be encouraged to play a greater role in diplomacy; actively building relations with foreign countries to harness their mutual cultural and commercial strengths." The Congress, on the other hand, has been silent about regional or bilateral agreements in its manifesto.
The new government will have two important agreements to tackle when it starts work. The first is the Regional Comprehensive Economic Partnership (RCEP) and the India-European Union (EU) agreement that has been hanging fire for long.
The RCEP includes the 10 Asean member states and those countries that have existing free trade agreements (FTAs) with Asean - Australia, China, India, Japan, the Republic of Korea and New Zealand. This agreement involves broader and deeper engagement with significant improvements over existing Asean FTAs and comprehensive economic partnerships with dialogue partners. Participating countries feel the agreement will also provide a basis for addressing issues that may emerge in the future.
The India-EU negotiation for a comprehensive agreement has been delayed for long. Interestingly, BJP leaders, Murli Manohar Joshi and others have been critical of this agreement and had argued against it. Their prime ministerial candidate, Narendra Modi, had also opposed the India-EU agreement, stating that it would impact the dairy sector, which is critical to Gujarat.
Given the fact that there would be a lot of stress on improving the economy, it will be important for the new government to look at building sustainable links through FTAs. The regional and bilateral agreements can help companies in India to become a part of larger value chains, which will help them build a scale for global operations. Industry will need to play a very important role in advocating the need for India to remain engaged with partners through comprehensive agreements. Instead of looking at narrow domestic gains, industry will have to step out and seek many of these agreements, as long as they are able to get reciprocal market access benefits from other countries.
Going by the past, it is possible that if a BJP-led government comes to power, then it may conduct a full review of the existing agreements. Industry must help identify the sectors and areas that can benefit from such agreements and help the government review the agreements with a sharp focus on market-access needs.
The writer is Principal Adviser at APJ-SLG Law Offices
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
