India Canada FTA Are we on the right track

Western economies are increasingly recognizing India as a geopolitical and trading partner. India is also essential to Canada’s strategy in the Indo-Pacific region. India is also keen to strengthen its ties with Canada, acknowledging that Trade Minister Piyush Goyal has announced that India and Canada will review its Free Trade Agreement (FTA) with India, the progress of which will be examined every 15 days. If that happens, Canada will be the first among the G7 countries to sign a pact with India.

What is FTA?

Simply put, FTA stands for Free Trade Agreement. The agreement can be signed between two or more partners when they agree on certain obligations that protect trade, investment and IPRs (intellectual property rights), among other issues. The idea is to reduce or remove trade barriers between parties. So far, India has signed FTAs ​​with 13 countries. It helps the business sector of the countries to easily enter and compete in the market through zero or minimum tariffs. This creates a more predictable and transparent trading environment.

Since India has one of the highest import tariffs, at over 15%, it is important to have these agreements to increase imports. IPR protection is important to support artistic inventions and investments in research and development (r&d). For example, investments to develop drugs require high R&D with a lot of uncertainty.

Where are trade relations today?

India exports $2.9 billion to Canada compared to $2.85 billion in 2019-20. Imports amounted to $2.66 billion from $3.9 billion in 2019-20. Much of this trade is in agri-food products. Although the trade is balanced and there is no major deficit, there is still a lot of untapped potential.

If India expects to push for better market access for pharmaceuticals, agricultural products, more jobs in information technology, ready-to-wear and export of biological products indians. Basically, India wants to diversify its export list. For Canada, India is a good option to expand its trade options as the United States becomes more protectionist. The first still has most of its trade with the United States. Canada’s second largest trading partner is China, which is becoming a risky place to do business. In addition, Canada wants to increase its presence in the Indo-Pacific region, which gives it more incentive to increase its trade with India. The country can benefit from a Comprehensive Economic Partnership (CEPA) with India.

Talks for an FTA between India and Canada started over a decade ago in 2010, after which the last rounds of talks took place in 2017. There was a lull since 2017, until that we have seen talks of reviving negotiations on the trade deal in March 2022. while it was May 2022, the second round of talks had already begun. In September 2022, a fourth round of talks had already taken place and the two sides reached an Early Progress Trade Agreement (EPTA). The latest round ended on November 14, details of which have yet to be released.

According to some estimates, India is expected to become the third largest economy after the United States and China. Considering this fact, it is not surprising that many countries want to sign a trade agreement with India. Canada is currently an ideal place where this can be a win-win situation for both parties. There are minor, resolvable issues between the two countries, such as dairy trade and permit approvals. However, none of these issues are more important than life. We are in a good position to move towards CEPA by 2023. Given the subdued trade figures between the two countries at the moment, we are in a good position to amplify it.

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