Changing faces of India’s FTAs: A long way since Bangkok Agreement
FTA journey can be divided into three distinct phases.
1975-2004: In this phase, the focus was on reducing tariffs to promote merchandise trade. India embarked on its FTA journey in 1975 by signing the Bangkok Agreement with Bangladesh, Sri Lanka, and S Korea.
This evolved into the Asia-Pacific Trade Agreement (APTA) in 2005 with China’s inclusion. APTA stands out as the sole trade pact that grants concessions on Chinese goods entering India. Additionally, India joined the Global System of Trade Preferences (GSTP) in 1989, involving 43 other developing countries in exchange for tariff concessions.
Unfortunately, awareness of these concessions among Indian exporters is limited. India also signed the South Asian Association for Regional Cooperation (SAARC) Preferential Trading Arrangement (SAPTA) in 1993 to boost trade with immediate neighbours, including Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, and Sri Lanka. APTA, GSTP and SAPTA agreements are known as Preferential Trade Agreements because of limited trade coverage.
An agreement is called a Free Trade Agreement (FTA) when tariff concessions are exchanged on substantial trade. It was not until 1998 that India signed its first FTA with Sri Lanka, facilitating access to the Indian market. These efforts were part of India’s strategy to enhance economic integration in South Asia.
2004-2022: This phase shifted focus towards comprehensive pacts covering not only goods but also services, investments, and other subjects. In 2005, India inked its first Comprehensive FTA with Singapore, the Comprehensive Economic Cooperation Agreement. Singapore’s cooperation paved the way for India to sign an FTA with ASEAN in 2010.
