Commerce Department sets up FTA utilisation cell to help exporters tap trade pacts

New Delhi: The Department of Commerce has established a free trade agreement (FTA) utilisation cell to help domestic businesses identify opportunities under India’s trade pacts and translate preferential market access into higher exports, Commerce Secretary Rajesh Agarwal said on Wednesday.

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Speaking at the India-EFTA Prosperity Summit, Agarwal said the cell would explain the agreements to entrepreneurs through industry associations, export promotion councils (EPCs) and state governments. It would also work with EPCs on market-specific action plans covering the next four to five years.

"We have created an FTA utilisation cell in our department of commerce. The idea behind that cell is - first explain the FTA and explain the opportunities to every entrepreneur across the country through the industry associations, through the EPCs (export promotion councils), through the state government so that people understand what does a free trade agreement provides for and how these are new opportunities that businesses need to look at," Agarwal said.

"Two, work with all the EPCs to see that we are able to improve FTA utilisation, we are able to have an action plan for each of the market with our partner country and we are able to work on it for next 4-5 years to actually see that this FTAs lead to actual integration of partner country market with Indian market," he added.

Access to 32 European markets

India has finalised trade pacts with the four-nation European Free Trade Association (EFTA), New Zealand, Mauritius, the UAE, Australia, Oman, the European Union and the UK.

The India-EFTA Trade and Economic Partnership Agreement (TEPA) came into force in October last year. The bloc comprises Iceland, Liechtenstein, Norway and Switzerland.

Agarwal said the EFTA agreement should be viewed alongside India’s pacts with the 27-member EU and the UK, together covering 32 countries.

"So all together, we have got 32 countries in the region with which India will have a free trade arrangement wherein we will have the majority of our trade at zero tariffs. We have opened up our markets for them and they have opened up their markets for us" he said.

Tariff certainty key to investment

Agarwal said the value of trade agreements extended beyond tariff reductions, with predictable duties allowing businesses to make longer-term investment and supply-chain decisions.

"The big ticket item in trade agreements is tariff predictability because for businesses...now you know that for perpetuity or for the entire near future that you can see, the tariffs are going to remain stable and they are not going to throw any surprises in between. So you can take investment risks, you can build supply chains based on that and you can plan your future business growth based on that. That is the strength of this agreement," he said.

He described the 32 countries as developed, high-income markets offering strong demand in both volume and value. Exporters should use the agreements to make long-term business decisions, he said.

Agriculture offers export potential

Agarwal also highlighted opportunities for agricultural exports, noting that these markets collectively import agricultural goods worth more than USD 1 trillion.

"If you are looking at a market of that size, I think there is a huge opportunity for us. The tariffs in agriculture have not gone down to zero in every sector but they have gone down to zero or there has been preferential access in many of the products where we do have strengths," Agarwal said.

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India currently accounts for less than one percent of EFTA’s total imports, with shipments of about USD 2–3 billion, he said.

"Can we use these FTAs, the business certainty that it gives to actually aspire to arrive at maybe a 2 per cent of the overall import basket of this market in next 3-4 years," he said.

He urged export promotion councils to draw up action plans to convert the opportunities offered by the agreements into a larger market share for Indian businesses.

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