Trade Agreements

From independence in 1947 and until the dawn of 1990s, the trade policy of India was heavily influenced by the "Swadeshi" i.e. self sufficiency mentality and the "licence raj" system of restrictions on production and imports.

First generation of reforms took place between 1991 to 1996. It aimed at liberalising trade - led to a reduction of import tariffs, the elimination of quantitative restrictions, exchange rate reforms and deregulation of industries. It resulted in a yearly growth rates of around 7% compared with 3% before the reforms.

Now, India is a member of all the major multilateral economic fora, be it International Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB). India is even a founding member of GATT and the World Trade Organisation (WTO).

Regionally India is a member of SAARC (the South Asia Association of Regional Co-operation) and BIMSTEC (Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Co-operation). India enjoys different types of trade agreements with many countries. The complete list is given below:

Free Trade Agreement (FTA)
Free Trade Agreement between two countries or group of countries agree to eliminate tariffs, quotas and preferences on most of the goods (if not all) between them. Countries choose FTA if their economical structures are complementary, not competitive. India enjoys FTA, till date, with the following two countries:

• Srilanka (28 December, 1998)
• Thailand (9th October, 2003)

Trade Agreements
It is a bilateral or multilateral treaty or any other enforceable compact which commits two or more nations to a specified terms of commerce, most of time involving mutually beneficial concessions.

• Bangladesh
• Bhutan
• Ceylon
• Maldives
• China
• Japan
• Korea
• Mongolia

Trade Treaty

• Nepal

Comprehensive Economic Cooperation Agreement (CECA)

• Singapore

Framework Agreement
A framework agreement is one which sets the stage for future substantive liberalization by defining the scope and terms of reference for some new area of discussions. List of countries with which India enjoys Framework Agreement are as mentioned below:

• With GCC states i.e. The Member States of the Cooperation Council for the Arab States of the Gulf.
• With ASEAN i.e. The Association of South East Asian Nations.
• With Chile.

* NOTE : India will eliminate tariffs in 2011 for Brunei Darussalam, Cambodia, Lao PDR, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam; Brunei Darussalam, Indonesia, Malaysia, Singapore and Thailand will eliminate in 2011 and new ASEAN Member States i.e. CLMV will eliminate in 2016 for India. India and Philippines will eliminate tariffs for each other on a reciprocal basis by 2016.

Regional Agreement
South Asia Free Trade Agreement (SAFTA) with Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives.

Preferential Trade Agreement (PTA)
This trade gives preferential access to only certain products. It is done by reducing tariffs, but it does not abolish them completely. PTA is established through trade pact and it is the weakest form of economic integration. India enjoys PTA with the following countries:

• Afghanistan
• Chile
• MERCOSUR - It is a trading bloc in Latin America comprising Brazil, Argentina, Uruguay and Paraguay. It has Chile and Bolivia as its associate members. MERCOSUR was formed in 1991 with the objective of facilitating the free movement of goods, services, capital and people among the four member countries.