India is in discussion with Australia for a Free Trade Agreement (FTA), after it pulled out of the Regional Comprehensive Economic Partnership (RCEP) in November 2019. The talks also come despite the fact that New Delhi has been pushing for Atmanirbhar Bharat.
Foreign Minister Subrahmanyam Jaishankar, in an interview with Australi-based Lowy Institute, confirmed that there is a discussion on a FTA, a bilateral free trade agreement, as well as because India didn’t sign the RCEP. He said India and Australia would have very strong defence ties and a strong trade cooperation.
According to various analysts, New Delhi left RCEP because the government feared that by joining the trade deal, its domestic market would have been swamped by imports, and this would put its domestic industry and agriculture at risk. It intended that not joining the world’s largest trade bloc, would boost the Make in India initiative and protect the country’s economic interests and national priorities. But then again, with free trade agreements, the question that arises is that will India be able to protect its domestic industry.
The Union Commerce and Industry Minister Piyush Goyal, had last month, pointed out that FTAs are good for the nation and India must leverage these pact with countries having transparent trading mechanisms and business systems. “I believe, per se FTAs are not bad, FTAs are good for the nation and we must leverage FTAs with countries with whom you have transparent trading mechanisms, who are working with transparent business systems and with whom the Indian industry can engage from a position of strength for certain products,” he explained. “One of the primary reasons why India could not join RCEP was that some of the members do not really have democratic transparent trading systems. And when you are dealing with an unfair partner, a partner which does not really give a level playing field or reciprocal access or where there is a risk of predatory pricing, where there is a risk of circumvention of country of origin rules, one does have to be cautious.”
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Besides Australia, India is working on reviving trade talks with the European Union, United Kingdom, Mexico, South Africa. And its keen to rework existing FTAs with Japan, Malaysia and South Korea.
