Regional trade agreements (RTAs) have become increasingly popular in India as a means to enhance economic growth and promote trade within the region. RTAs are agreements between two or more countries that aim to reduce barriers to trade, such as tariffs and quotas, and foster closer economic ties.
India has signed a number of RTAs with its neighboring countries, including the South Asian Free Trade Area (SAFTA), the India-Sri Lanka Free Trade Agreement (ISFTA), and the India-ASEAN Free Trade Agreement (FTA). These agreements have had a significant impact on trade between India and its trading partners.
The SAFTA, which came into force in 2006, is an agreement between India, Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, and the Maldives. The objective of the agreement is to promote economic cooperation and reduce trade barriers between the member countries. Under the SAFTA, member countries have agreed to reduce tariffs on a number of goods, which has led to increased trade between the member countries.
The ISFTA, signed in 1998, is an agreement between India and Sri Lanka. The agreement aims to promote trade in goods between the two countries and reduce trade barriers. Under the ISFTA, India has granted duty-free access to a number of Sri Lankan products, including tea, rubber, and coconuts. In return, Sri Lanka has granted duty-free access to a number of Indian products, including textiles and chemicals.
The India-ASEAN FTA, signed in 2009, is an agreement between India and the Association of Southeast Asian Nations (ASEAN). The agreement aims to promote trade between the two regions and reduce trade barriers. Under the agreement, India has granted duty-free access to a number of ASEAN products, including electronics, chemicals, and machinery. In return, ASEAN has granted duty-free access to a number of Indian products, including pharmaceuticals and textiles.
While RTAs have had a positive impact on trade between India and its trading partners, they have also faced criticism. Some critics argue that RTAs can create trade diversion, where trade is redirected away from more efficient suppliers to less efficient suppliers within the region. Others argue that RTAs can be exclusionary, as they may exclude countries that are not part of the agreement or are unable to meet the agreement`s standards.
Despite these criticisms, RTAs have become an important tool for promoting trade and economic growth in India and its neighboring countries. As the global economy becomes increasingly integrated, RTAs will continue to play a critical role in promoting economic cooperation and reducing trade barriers.