India, 18 April 2022: The International Business Area of FORE School of Management hosted the fourth seminar under its Global Leadership Lecture Series aimed at developing new dominance of managerial thoughts and education and contributing to building leaders in today’s global business environment. Dr. Amitendu Palit, Senior Research Fellow and Research Lead (Trade and Economics), Institute of South Asian Studies, National University of Singapore, discussed the geo-economic and geopolitical drivers of India’s new trade strategy and FTA engagement.
Dr. Amitendu Palit specializes in international trade and investment policies in geoeconomics Asian connectivity, digital–political economy, and the Indian economy. In the seminar, Dr. Palit discussed the external and domestic factors and their impacts and implications on India’s trade strategy and FTA engagement, the transition in India’s trade engagement, new FTA strategies in place, COVID convictions, and future trade possibilities.
India is largely a country that was hesitant as far as greater integration with the world economy through free trade. The situation has remarkably changed over the last 6 months to 1 year. Today India perhaps has the most FTAs in the world.
India has concluded FTAs with UAE and Australia. It is currently negotiating FTAs with the UK, Canada, and European Union. The initiative of forming free trade alliances with the UK and UAE is a fresh start. Additionally, India is also in talks with the Gulf Council Cooperation and Israel, even though formal negotiations haven’t started yet.
It has been two years since the pandemic hit and the outlook towards many things has changed and perhaps many of these changes are going to be very fundamental in deciding how individuals and organizations go ahead and try to live and work around what countries and the world views as a new normal. The idea of the new normal is very subjective but one thing has emerged very clearly out of the pandemic experience; the restrictions during COVID painted a rather grim picture for trade. On the contrary, today, there is a fair exchange, free exchange, and easy exchange of goods and services across the borders, of course under specific conditions, that is going to be of much bigger help to countries and to international communities in taking care of not just public health needs but also national economic needs.
The pandemic brought to our notice the fact that destruction in the supply chain is very commonplace and the countries need to safeguard it because supply chain vulnerability can cause strong economic distress for a large number of countries. The other external factors that affected trade are armed hostilities and conflicts in Myanmar, Afghanistan, Russia-Ukraine, and Indo-China. There is also reduced faith in global institutions like the UN and WHO because of the way they handled conflicts and the COVID crisis.
Dr. Palit discussed the goals that should be aligned to trade policy which include sustainable development, digital integration with the world economy, maturing start-ups to withstand the gap in eco-systems, and making efforts to lower the drive of external migration. These goals need to be aligned with the geo-economic and geo-political conditions.
India withdrew from the RCEP (Regional Comprehensive Economic Partnership) almost 16 months ago. Dr. Palit discussed the reasons behind the revival of interest in FTAs under three categories: Geoeconomics, Geopolitics, and Covid impulse.
India has formed trading partnerships with UAE, Australia, the UK, Germany, Belgium, Canada, and Japan. The FTAs are being negotiated with India’s largest investors. The main motive is to tie up with the world’s largest and most advanced high-income economies for greater market access to both goods and services.
India’s current strategic thinking emphasizes deeper engagement with Western partners and allies – the UK, EU, Canada, UAE, and the Gulf countries. There is also close engagement with ASEAN countries, Japan, Australia, and Korea. The multipolar strategic thinking is being reflected through closer security and economic partnerships with the Eastern and Western Quad.
COVID-19 posed an economic security threat to India due to vulnerabilities in the supply chain. India has to work with partners to build resilience in the supply chain and these consultations can be facilitated by FTAs.
Even 2 years ago India looked at FTAs from an economic perspective but it is not like that anymore. India has begun taking serious note of its national interest particularly the security and strategic economic interest. Dr. Palit concluded the seminar with an interactive QnA session with the management students at FORE School.