How FTA benefits India in terms of new export opportunities

Every country relies on trade to meet demand and introduce newer innovations because no country is self-sufficient in every way. Trade also becomes a significant source of revenue for countries due to taxes and entry barriers. To facilitate trade routes, two or more countries or groups of countries enter into Free Trade Agreements (FTAs), which eliminate customs tariffs and tariff barriers on significant trade. FTAs promote the free flow of goods and services in trade. Aside from FTAs, other arrangements undertaken by bodies to liberalise trade include Preferential Trade Agreements (PTA), Comprehensive Economic Cooperation Agreements (CECA), Comprehensive Economic Partnership Agreements (CEPA), Customs Union (CU), Custom Market (CM), and Economic Union (EU).

What is FTA?

A free trade agreement (FTA) is an agreement reached between countries or regional groups to reduce or eliminate trade barriers through mutual negotiations with the goal of increasing trade. However, it can be broad enough to include goods, services, investment, intellectual property, competition, government procurement, and other areas. Customs duties or tariffs, rules of origin, non-tariff measures such as technical barriers to trade (TBT), sanitary phytosanitary (SPS) measures, trade remedies, and so on are among the key areas covered in the context of goods. Negotiations on services are focusing on barriers to various modes of supply, such as domestic regulations.

How an FTA Works?

In today's world, free trade policies are frequently implemented through the formal and mutual agreement of the nations involved. A free-trade policy, on the other hand, could simply be the absence of any trade restrictions. To promote free trade, a government does not need to take specific steps. This laissez-faire approach is known as trade liberalisation or laissez-faire trade. Governments that have implemented free-trade policies or agreements do not necessarily relinquish all control over imports and exports or abolish all protectionist policies. Few free trade agreements (FTAS) result in completely free trade in modern international trade.

Few previous FTA negotiations and beneficial outcomes

The India-Sri Lanka Free Trade Agreement (ISLFTA), signed in 1998, went into effect in 2000. In the SAARC region, Sri Lanka is India's largest trading partner. Bilateral trade between India and Sri Lanka has increased fourfold in the last nine years, from US $ 658 million in 2000 to US $2719 million in 2009. Petroleum (crude and products), transportation equipment, cotton yam fabrics, super drugs, pharmaceuticals, and fine chemicals are the most important Indian exports to Sri Lanka. Spices, electrical machinery (except electronic), transport equipment, pulp and waste, natural rubber, and paper board are the most important Sri Lankan exports to India.
In 2020, India was Australia's seventh-largest trading partner and sixth-largest export destination. However, bilateral ties between India and Australia are expected to grow even faster now that both countries have agreed to conclude negotiations on a Comprehensive Economic Cooperation Agreement (CECA) by the end of 2022. This Free Trade Agreement was reached after nearly a decade of negotiations and will result in more liberalised and deepened bilateral relations between India and Australia.. The agreement is expected to cover goods trade, services, investment, government procurement, logistics, transportation standards, and ongoing rules (criteria needed to determine the national source of a product). Both countries will re-engage and cooperate in a variety of areas, including critical minerals, health, critical technology, science, and agriculture.


India has signed the most free trade agreements (FTAs) in the South Asian region, including those under negotiation. For the implementation of the FTAS, the ministries have well- organized frameworks and regulations. South Asia Free Trade Agreement (SAFTA), Indo Malaysia CECA (IMCECA), and India Singapore CECA (ISCECA) are a few of the major agreements that have influenced Indian trade and opened doors to larger markets. Huge amounts of surplus trade have resulted from the agreements, such as the India-Sri Lanka FTA and the SAFTA FTA. FTAs are even properly regulated and reviewed on a regular basis, as in the case of the CECA between India and Singapore.

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