According to a white paper brought out by the Federation of Indian Chambers of Commerce & Industry (FICCI) and Mott MacDonald, a consultancy – most of the free trade agreements (FTAs) signed by India have not benefited the domestic chemicals and petrochemicals industry,
“The petrochemical industry in India is subjected to certain structural disadvantages which inhibit its competitiveness. Factors like high cost of capital and lack of adequate infrastructure place domestic petrochemical manufacturers at a significant disadvantage compared to their counterparts elsewhere,” the report said.
“The majority of the agreements concluded by India have not benefited the Indian chemicals and petrochemicals industry. The focus of these agreements had been reduction/elimination of tariff without adequate attention paid on other factors impacting trade. As a result, in most of the cases, Indian exports to these countries had gained relatively less as compared to imports, thus widening the trade gap,” it added.
India’s agreements with Singapore, Korea and ASEAN resulted in India providing preferential access to its huge market without commensurate gains, not even in the areas of services and investment, according to the FICCI report.
As India is already in trade agreements with most of the trade partners under RCEP, the agreements were notvfavourable to the Indian petrochemical sector so far. In 2009-10, India’s trade deficit in comparison with its three FTA partners was $16 billion, while in 2017-18, the deficit rose up to $31 billion, according to reports.
FICCI has called for the constitution of a permanent regulatory board to review existing FTAs. “The board will be entrusted with the responsibility of reviewing existing FTAs taking into account the sectoral sensitivities and formulating the approach for FTAs under negotiation,” said the FICCI report.