India is advised to undertake a comprehensive review of its Free Trade Agreements (FTAs) and revamp its investment screening mechanisms, according to a report titled "Resilience in a Fragmenting World: India's Economic Relations with Great Powers". This report, based on consultations with policymakers and industry representatives, emphasizes the need for India to adopt a more strategic approach to its economic engagements.
Comprehensive Audit of FTAs
The report suggests that India should conduct a thorough audit of its existing FTAs to evaluate their effectiveness in enhancing exports, market access, and supply chain resilience. Some agreements have reportedly led to increased imports without corresponding export growth, while others have facilitated transhipment.
- Exports and Market Access: The audit aims to determine if FTAs have achieved their intended outcomes.
- Supply Chain Resilience: Evaluating the impact on supply chains is crucial.
Sector-Specific Investment Screening
The report recommends moving from broad geographic restrictions to a sector-specific investment screening mechanism, especially concerning economic engagement with China. This approach should balance national security concerns with economic productivity.
"India faces the dual challenge of reducing strategic vulnerabilities while sustaining manufacturing growth and competitiveness," said Dr. Deep Pal, Director, Geopolitics and Policy at Koan Advisory Group.
Strengthening Bilateral and Multilateral Engagements
India is encouraged to secure greater market access through future trade agreements and to leverage bilateral investment treaties more effectively. Engagement with multilateral institutions like the World Trade Organization is also emphasized.
| Aspect | Current Approach | Recommended Approach |
|---|---|---|
| Investment Screening | Broad geographic restrictions | Sector-specific mechanisms |
| FTA Evaluation | Limited audits | Comprehensive audits |
Policy Alignment and Emerging Opportunities
The report calls for better alignment between trade, industrial, and tax policies. It also highlights opportunities in emerging sectors such as artificial intelligence and data infrastructure, recommending deeper technological collaborations.
- Policy Coordination: Aligning trade and industrial policies is crucial.
- Emerging Sectors: Focus on AI and data infrastructure for future growth.
