Free Trade Agreements
 As the name indicates, this is an International
Agreement to facilitate Free Trade among the
countries signing the FTA.
 Many Governments through out the world
have either FTA or are negotiating signing of
such agreement towards international
integration into a global free market
economy.
Free Trade Agreements
(Contd.)
 It is presumed that Free Trade and removal of
duties will lead to faster economic growth
and help in reducing poverty and increasing
standard of living and employment
opportunities.
 Normally FTA covers merchandise exports
only. The duty level for the goods traded
between the countries could be as low as 0%.
Free Trade Agreements
(Contd.)
 India has signed FTA with Sri Lanka in 2000
and Thailand in 2004.
India’s Trade with Thailand
before and after signing the
FTA in 2004
USD Million
2002-03
2003-04
200405
2005-06
2009-10
Export
711.20
831.68
901.39
1,075.31
1,740.16
Import
379.00
609.05
865.88
1,211.58
2,931.52
Total
1090.00
1440.73
1767.27
2286.89
4671.68
India’s Trade with Sri Lanka
before and after signing the
FTA in 2000
USD Million
1998-99 19992000
200001
2001-02
2009-10
Export
437.13
499.27
640.14
630.89
2,188.01
Import
37.68
44.23
45.01
67.38
392.19
Total
474.81
543.50
685.15
698.27
2580.20
Current Engagements in FTAs
 The Government of India is negotiating more
FTAs with a number of countries including
Japan, EU, Chile and MERCOSUR, which may
materialize in the near future.
 It is hoped that with the revival of global
economy and economic growth, these FTAs
will have better impact on India’s trade and
economic relations with these countries.
Comprehensive Economic
Partnership Agreement (CEPA)
 CEPA is a Comprehensive Agreement which
includes merchandise services, investment and
trade barriers.
 CEPA is much more advantageous for the
signing countries as it has a wider base then FTA,
and helps promoting economic growth at a
much faster pace.
 This Agreement helps the services sector by
providing additional favourable treatment to the
service providers in these countries and thereby
promoting this very important sector.
Comprehensive Economic
Partnership Agreement (CEPA)
 The Agreement also covers investment
climate for the signing countries as more
liberal and concessional treatment could be
agreed for the investors thereby giving a
boost to investment.
 India has already concluded CEPA with
Singapore and Korea.
 On going negotiations are in progress with a
number of countries like Malaysia, Japan, Sri
Lanka, Thailand, etc.
How FTA/ CEPA benefits
exports?
 Exports get better market access by reduction in
import duty in the country with whom FTA is
signed
 Encourages inputs of imports at lower or zero
duty for manufacture of export goods and also
increases competitiveness
 Flags Non Tariff Measures in such country for the
redressal
 In CEPA, services exports also gain momentum
due to liberalization of all four modes
THANK YOU