Lost in India's celebrations of trade pacts, the big deal, Pg10

Key Highlights:

• India maintains a significant annual goods trade surplus of approximately $42 billion with the United States.
• This US surplus is nearly four times the combined surplus India holds with the European Union, the United Kingdom, and Japan, which totals around $12 billion.
• India has recently celebrated trade agreements with the EU and the UK, and an earlier one with Japan, but lacks a comprehensive deal with the US.
• India faces a substantial goods trade deficit with China, reaching approximately $99 billion in 2024-25.
• The article suggests an India-US Free Trade Agreement would be the most impactful for India's trade strategy and its Viksit Bharat goal.

Detailed Insights:

• The US is India’s most crucial destination for high-value, knowledge-intensive manufactured exports, including generic pharmaceuticals and electronics assembly.
• India supplies roughly 40% of the generic drug volumes to the US market, highlighting a key comparative advantage.
• An India-US trade agreement could also open India's market to American agriculture, energy, and defense goods, while securing market access for Indian IT and professional services.
• The EU-India FTA is important for addressing tariffs on Indian textiles and garments, where India currently faces disadvantages compared to countries like Vietnam.
• The Comprehensive Economic and Trade Agreement (CETA) signed with the UK in July 2025 provides duty-free access for 99% of India’s exports to the UK.
• The Comprehensive Economic Partnership Agreement (CEPA) with Japan, signed in 2011, has not met its trade targets, with India now running a deficit due to Japan's non-tariff barriers.
• The difficulty in achieving an India-US deal stems partly from political economy factors, including protection for inefficient Indian producers and potential shifts away from Chinese manufacturing dominance.

Key Concepts Involved:

• Free Trade Agreement (FTA): A pact between two or more countries to reduce or eliminate barriers to trade, such as tariffs and quotas.
• Trade Surplus: An economic measure where a country's exports exceed its imports, resulting in a positive balance of trade.
• Trade Deficit: An economic measure where a country's imports exceed its exports, resulting in a negative balance of trade.
• Non-Tariff Barriers: Restrictions on trade other than customs duties, including quotas, import licenses, and product standards.
• Viksit Bharat: A vision articulated by the Indian government for India to become a developed nation by 2047, the centenary of its independence.