India and the UK are engaged in preparatory work to launch a free trade agreement (FTA) and formal negotiations will begin later this year, Commerce Secretary Anup Wadhawan said on Thursday. Negotiations for a planned FTA with the EU would resume even before that, he added.

New Delhi was also exploring the possibility of revising or improving various existing trade agreements, he said. For example, it seeks to review its FTAs ​​with Asean, Japan and South Korea to make them more balanced, and plans to improve its preferential trade agreement with Chile and Mercosur.

Since its withdrawal from the Beijing-dominated RCEP trade negotiations in November 2019, India has sought to accelerate negotiations with key economies for “fair” and “fair” trade pacts.

Analysts have already pointed out that FTAs ​​signed with ASEAN, Japan and Korea (all before 2010) have worsened India’s large trade deficit, and domestic exporters have not been able to benefit much. In FY20, before the pandemic spread its tentacles, India’s trade deficit with Asean reached $ 24 billion. Likewise, its deficit with South Korea and Japan stood at nearly $ 11 billion and $ 8 billion, respectively.

Refuting the claims of some analysts, Wadhawan stressed that the production-linked incentive programs (PLIs) announced by the government in the aftermath of the pandemic “are fully in line with the rules of the World Trade Organization (WTO), because the incentives are linked to production. ”.

The government announced 13 PLI programs, covering sectors such as automotive, telecommunications, electronics, pharmaceuticals, advanced chemistry cells, textiles, food processing and steel. The total promised incentives of Rs 1.97 lakh crore will be spread over five years.

Wadhawan exuded confidence that the country would be able to meet the ambitious goal of exporting goods of $ 400 billion for fiscal year 22. The “impressive” increase in exports in recent months is mainly due to to the growth of external demand, and not so much to an increase in world commodity prices, he added.

Merchandise exports even exceeded pre-pandemic levels (same months in 2019) for three months through May despite the second wave of Covid, indicating that a recovery is likely to be taking hold. Of course, export growth was weak even before the pandemic – outbound shipments increased by around 9% in 2018-19, but fell again by 5% in 2019-2020. Exports fell 7% in the previous fiscal year, weighed down by the Covid disruptions. Thus, only a sustained rise over the next 2-3 years would help the country regain the lost height of exports.