Center Cautious On FTAs To Safeguard Farmers & MSMEs

CENTER CAUTIOUS ON FTAs TO SAFEGUARD FARMERS & MSMEs

• On December 19, 2024, External Affairs Minister (EAM) Dr. S. Jaishankar addressed the Bharat@100 Summit organized by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in New Delhi.
• During his speech, he outlined the Indian government’s strategic approach to Free Trade Agreements (FTAs), emphasizing a cautious stance to protect the interests of farmers and Micro, Small, and Medium Enterprises (MSMEs).
• Jaishankar also touched on India’s economic resilience post-COVID-19 and the country’s growing global influence.

KEY POINTS FROM EAM’s ADDRESS

1. Cautious Approach to FTAs:

• Jaishankar emphasized that the Indian government has adopted a careful approach to Free Trade Agreements (FTAs) with the aim of protecting domestic sectors, particularly farmers and MSMEs.
• He explained that the government weighs the benefits and risks of each agreement to ensure that these agreements do not harm India’s manufacturing sector or vulnerable sectors.
• Key Rationale for Caution:
  • Impact on Farmers: FTAs need to ensure that India’s agricultural sector is not adversely affected by market access granted to other countries.
  • Impact on MSMEs: MSMEs are a significant part of India’s economy, contributing to employment, economic growth, and innovation. The government wants to ensure that MSMEs are not overwhelmed by competition from larger, more established foreign companies.

2. Past Experiences with FTAs:

• Jaishankar referred to previous trade agreements, particularly the ASEAN-India Trade in Goods Agreement, where concerns arose regarding its impact on India’s manufacturing sector.
• He suggested that such agreements need to be reviewed to prevent them from having negative consequences on domestic industries.
• ASEAN-India Trade in Goods Agreement: This agreement, in particular, raised concerns about the dumping of cheaper goods into the Indian market, which could harm Indian manufacturing and local jobs.

3. The Modi Government’s Cautious Stance:

• Jaishankar elaborated on the government’s cautious approach, linking it directly to Prime Minister Narendra Modi’s
• He mentioned that the Modi government has been particularly cautious about FTAs for two primary reasons:
  • Review of Past FTAs: The government is critically assessing the outcomes of previous FTAs to avoid repeating mistakes.
  • Protection of Domestic Sectors: The government aims to ensure that FTAs do not have an adverse impact on India’s agriculture or MSMEs.

4. Complexities in FTAs with the EU and UK:

• Jaishankar also highlighted the complexities involved in negotiating FTAs with countries like the European Union (EU) and the United Kingdom (UK).
• These negotiations are often more difficult due to the diverse interests of the member states and the inclusion of non-trade issues in the discussions.
• Non-trade Issues: In agreements with the EU and UK, discussions often extend beyond purely economic issues, touching upon concerns such as intellectual property rights, environmental standards, and labour rights. These complicate negotiations and make it harder to reach a consensus.
• Balancing Act: Jaishankar emphasized the need for India to balance opening up markets to international competition with the protection of its own domestic sectors. He warned against India becoming merely a “market for other countries” while neglecting to nurture its own industries.

5. India’s Post-COVID Recovery:

• Jaishankar reflected on how India managed the COVID-19 pandemic and emerged stronger than many other countries.
• He remarked that there was initial skepticism about India’s ability to manage the crisis effectively, especially in comparison to developed nations.
• India’s Resilience: Despite the challenges posed by COVID-19, India’s recovery has been robust. Jaishankar noted that India has done better than many developed nations in terms of managing the pandemic and its aftermath.
• Europe’s Struggles: Jaishankar pointed out that Europe is still grappling with the economic disruptions caused by COVID-19, which were further exacerbated by the ongoing Ukraine conflict. In contrast, India’s economic recovery has been relatively stronger, positioning it as a growing economic power in the global arena.

6. India’s Growing Global Influence:

• Jaishankar also touched on India’s growing global stature and its rising influence in international affairs.
• He cited India’s space achievements, such as the successful launch of Chandrayaan-3, as an example of the country’s increasing global visibility.
• Global Interest in India: Jaishankar emphasized that the world is increasingly interested in engaging with India. He stressed that India must make these engagements easier, profitable, and mutually beneficial to attract global investment and collaboration.
• Strategic Positioning: As India moves forward, Jaishankar called for India to become a leading partner in international cooperation, especially in areas of technology, trade, and global governance.

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