Wary of FTAs, India may be turning trade protectionist

December 16, 2020 Mint 0 Comments

When India refused to join the mega trade agreement Regional Comprehensive Economic Partnership (RCEP) at the 11th hour in November last year after negotiating for seven long years, it only invited more accusations of turning protectionist with its tariffs already on an upward trajectory.

Since 2014, India has raised tariffs on 3,200 items, resulting in an average industrial tariff increasing from 13% to nearly 18% in 2019. The largest increases occurred in 2018 when there were nearly 2,500 tariff increases amounting to nearly 4 percentage points. India’s trade as a percentage of gross domestic product (GDP) also declined from its peak of 55.8% in 2011 to 40% in 2019, the sharpest drop coming post-2014 when it stood at 48.9%. Between 2004 and 2014 under then prime minister Manmohan Singh, India signed 11 preferential or free trade agreements (FTAs) while none under Prime Minister Narendra Modi’s government. Read More.

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