India picks PTAs over FTAs in trade policy shift

New Delhi: The Indian government has shifted its trade policy, favoring Preferential Trade Agreements (PTAs) over full-fledged Free Trade Agreements (FTAs) with developing nations like South Africa. This strategic move is to ensure that only specific product categories are opened up, rather than a deep, across-the-board market access which may not be in India's best interest.

India's decision to pursue PTAs allows both countries to identify specific products of mutual strength and interest, granting market access in areas where each nation has advantages.

PTAs are trade pacts that reduce tariffs and other trade barriers between member nations, but they don't completely eliminate all tariffs, typically applying only to a selected list of products. This approach is part of a broader strategy to negotiate PTAs with Mercosur, a South American trade bloc including Brazil, and potentially with Mexico and Kenya. Ecuador has also approached India about a full FTA.

The Commerce Secretary is set to visit Chile by the end of August or next month to gauge the potential for a mutually beneficial deal. The government's approach to trade negotiations is markedly different from the previous UPA government, which was criticized for superficial stakeholder consultations during FTAs. The current government adopts a 'whole of the government, whole of stakeholders model', ensuring that all concerned parties are consulted and taken into account before finalizing any trade agreement.