He expects to export Matrix Clothing Pvt Ltd within three years European Union And the UK is more than double the current level. “The industry is very excited,” company co-founder Nair said over the phone.
Prime Minister Narendra ModiThe Indian government is pursuing several free trade agreements, taking advantage of India’s growing appeal as the world’s fastest growing major economy and an alternative to China for global supply chains. India hopes its deals with countries from the UK to Australia will help boost its manufacturing and benefit millions of youth entering the workforce in the coming years.
The latest, and one of the most ambitious, was a trade and investment agreement signed on March 10 with four European countries, including Switzerland and Norway. It signaled India’s readiness to meet commitments in areas such as labour, environment and sustainability and gender – topics it had shied away from in the past. This was the first time India achieved an investment commitment of $100 billion over 15 years in such a deal.
India has now signed four FTAs in quick succession from 2021 after a gap of almost nine years where no agreement was reached. The latest agreement with the group of European countries, known as the European Free Trade Association, or EFTA, was hailed by Modi and comes just weeks before elections in which he seeks to extend his decade in power.
Talks with Britain and Australia are likely to conclude after the Indian elections in April-May, while talks with Oman have already concluded and a deal could be signed as soon as this month, people familiar with the matter said. Said on condition of anonymity because the conversation is personal.
The hope is that such deals will provide a level playing field to India’s textile sector, which accounts for more than 14% of the country’s annual exports, directly employs more than 45 million people, and contributes 4% to GDP. contributes more than. Marine goods, auto and machine parts, chemicals, leather and footwear and gems and jewelery products are also set to gain.
Moving away from its protectionist past, India is adopting trade deals to capitalize on changing global trade alliances. Companies ranging from Apple Inc. to Samsung Electronics Co. have boosted manufacturing in India, taking advantage of production incentives offered by the Modi government.
“This is a huge historic moment for India, probably its biggest opportunity on the world stage since India gained statehood in 1947,” said Alex Capri, a lecturer at the Lee Kuan Yew School of Public Policy in Singapore.
To take advantage of that opportunity, the South Asian nation must address infrastructure deficiencies and improve the ease of doing business by cutting excessive regulation, taxation and red tape. “Delhi is removing all obstacles. They know they have to fix it,” Capri said.
By integrating into global value chains, India can create 80 million jobs by 2030, according to a government report.
Geopolitically, New Delhi is building deeper ties with the Group of Seven countries. Now, it also aims to align economically to compete with countries like Vietnam and Bangladesh that are positioning themselves as alternative manufacturing destinations to China.
The services sector, which makes up more than half of the country’s GDP, is also expected to get a boost. The trade deals will help India secure easier access for professionals in sectors including IT, health and accounting.
For counterparts, India and its market of 1.4 billion people holds immense attraction. On the sidelines of the 13th WTO Ministerial Conference last month, EU Trade Commissioner Valdis Dombrowski said, “We are keen to move forward when we recognize that India has traditionally been a relatively closed market.”
Australia’s Assistant Trade Minister Tim Ayres said early results from the interim trade agreement showed strong results for businesses and said both countries were working towards a second phase.
Yet despite all that enthusiasm, obstacles remain. India and Britain have still not resolved differences on issues including investment protection, social security agreements and market access for British apples and cheese.
non-tariff barriers
There is an atmosphere of resistance at home also. For example, the Confederation of Indian Alcoholic Beverage Companies has expressed concern over market opening without reciprocal treatment.
Vinod Giri, director general of the association, said while much of the focus of trade talks has been on duty concessions, non-tariff barriers such as maturity requirements for whiskey in the UK and Europe have made Indian beverages uncompetitive.
Giri said that according to UK law, whiskey must be matured for a minimum of three years, while whiskey in warm climates like India matures 3-5 times faster than in the cooler climates of Britain and the EU.
“Most of our whiskey is unable to reach those markets because of these barriers and we want them removed,” Giri said. He said long ripening conditions increase production costs by 35%. “As long as FTAs are fair and equitable, we have no problem.”
And many people are still finding it difficult to do business in India. Deborah Elms, head of trade policy at the Singapore-based Heinrich Foundation, said while there has been an increase in the number of corporates mentioning India or Indian investments on earnings calls, it does not always translate into commitments.
“In many cases, barriers to investment or development at the grassroots level in India remain significant,” he said. “These gaps are creating problems for businesses, meaning a positive narrative around Indian prospects cannot be delivered.”
The Government of India is aware of this challenge. It is helping states simplify rules, decriminalize minor offenses and repeal unnecessary laws. The government has also come up with a single window system to expedite the process of obtaining necessary approvals and clearances by investors while cutting down the compliance burden.
As for The Matrix’s Nair, he’s also toning down his optimism. “Companies are cautious because we have been waiting a long time for deals to happen,” he said.
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