OBJECTIVE Trade agreements are when two or more nations agree on the terms of trade between them. They determine the tariffs and duties that countries impose on imports and exports. All trade agreements affect international trade. In this webinar, we shall look and the salient features and impact of various trade agreements entered into by India.

1. India’s Trade Agreements
CA Divakar Vijayasarathy

2. RESEARCH CREDITS
2
V Thirumal
CA Jugal Gala

3. 3
Legends Used
ASEAN The Association of Southeast Asian Nations
CECA Comprehensive Economic Cooperation Agreement
CEPA Comprehensive Economic Partnership Agreement
EIA Economic Integration Agreement
FTA Free Trade Agreement
GDP Gross Domestic Product
PTA Preferential Trade Agreements
PSA Partial Scope Agreement
RBI Reserve Bank of India
WTO World Trade Organisation

4. 4
Introduction
India and Trade
Agreements
Timeline of Major
Agreements
Types of Trade
Agreements
List of India’s
Trade Agreements
RBI Study on
Impact of Trade
Agreements
Details of Study
Impact of Trade
Agreements on
India’s Trade
Impact of Trade
Agreements on
Imports
Impact of Trade
Agreements on
Exports
Analysis of Recent
Trade Agreements
Conclusions of the
Study
Statistics
Presentation Schema

5. 5
Introduction
Trade Agreements are arrangements by which countries provide preferential treatment to each other and which
aid greater ease-of-trade by elimination of tariffs and other trade barriers
Trade Agreements can be between two or more countries that primarily agree to reduce or eliminate tariff
and non-tariff barriers between the countries
India has entered into bilateral and regional trading agreements over the years.
These agreements, besides offering preferential tariff rates on the trade of goods among member countries,
also provide wider economic cooperation in the fields of trade in services, investment, and intellectual property

6. 6
India and Trade Agreements
In the past decade India’s trade policy has seen a marked shift towards regionalism
India has preferential access, economic cooperation and Free Trade Agreements
(FTAs) with about 54 individual countries.
India has signed bilateral trade deals in the form of Comprehensive Economic
Partnership Agreement (CEPA)/ Comprehensive Economic Cooperation Agreement
(CECA)/ FTAs / Preferential Trade Agreements (PTAs) with around 18
groups/countries

7. Timeline of Major Agreements
7
1975
India’s First Trade
agreement was the
Bangkok Agreement
(multilateral)
1998
India’s first bilateral
FTA was signed with
Sri Lanka
2004
South Asian Free Trade
Agreement (SAFTA)
Comprehensive
Economic Cooperation
Agreement (CECA)
with Singapore
2005
2010
-Indo- ASEAN FTA
-Indo-South Korea Comprehensive
Economic Partnership Agreement (CEPA)
2011
Indo-Malaysia CECA
and Indo-Japan CEPA

8. Types of Agreements
8
Free Trade
Agreement
(FTA)
A free-trade area shall mean a group of two or more customs territories in which the duties and
other restrictive regulations of commerce are eliminated on substantially all the trade between
the constituent territories in products originating in such territories
Agreement liberalizing trade in services between or among the parties to such an
agreement, provided that such an agreement:
(a) Has substantial sectoral coverage*, and
(b) Provides for the absence or elimination of substantially all discrimination, between or
among the parties, in the sectors covered under subparagraph (a), through:
(i) Elimination of existing discriminatory measures, and/or
(ii) Prohibition of new or more discriminatory measures,
either at the entry into force of that agreement or on the basis of a reasonable time-frame
Economic Integration
Agreement (EIA)
*In order to meet this condition, agreements should not provide for the a priori exclusion of any mode of supply
a priori - relating to or denoting reasoning or knowledge which proceeds from theoretical deduction rather than from observation or experience
Discriminatory measures – regulatory restriction on imports, taxes on imports, preferential treatment to certain trade partners
means that the agreement covers only certain productsPartial Scope Agreement (PSA)

9. List of India’s Trade Agreements
Trade Agreement Acronym
No. of
Member
Countries
Member Countries
Date of
Signature
Type
Asia Pacific Trade
Agreement
APTA 6
Bangladesh, China, India, Laos,
Republic of Korea, Sri Lanka
Goods: 17-06-
1976, Services:
17-09-2013
Partial Scope
Agreement
(PSA) and
Economic
Integration
Agreement
(EIA)
Agreement on the
Global System of
Trade Preferences
among Developing
Countries
GSTP 43
Algeria, Argentina, Bangladesh, Benin,
Bolivia, Brazil, Cameroon, Chile,
Columbia, Cuba, Democratic People’s
Republic of Korea, Ecuador, Egypt,
Ghana, Guinea, Guyana, India,
Indonesia, Iran Iraq, Libya, Malaysia,
Mexico. Morocco, Mozambique,
Myanmar, Nicaragua, Nigeria, Pakistan,
Peru, Philippines, Republic of Korea,
Romania, Singapore, Sri Lanka, Sudan,
Thailand, Trinidad and Tobago, Tunisia,
Tanzania, Venezuela, Vietnam,
Zimbabwe
Goods: 19-04-
1989
PSA

10. Contd
Trade Agreement Acronym
No. of
Member
Countries
Member Countries
Date of
Signature
Type
Southern Common
Market India
MERCOS
UR India
5
Argentina, Brazil, Paraguay, Uruguay
and India
Goods: 01-06-
1989
PSA
South Asian
Preferential Trade
Arrangement
SAPTA 7
Bangladesh; Bhutan; India; Maldives;
Nepal; Pakistan; Sri Lanka
Goods: 07-12-
1995
PSA
Free Trade Agreement
between The Republic
of India and The
Democratic Socialist
Republic of Sri Lanka
ISLFTA 2 India and Sri Lanka
Goods: 15-12-
2001
FTA
Preferential Trade
Agreement between
the Republic of India
and the Transitional
Islamic State of
Afghanistan
- 2 India and Afghanistan
Goods: 13-05-
2003
PSA

11. Contd
Trade Agreement Acronym
No. of
Member
Countries
Member Countries
Date of
Signature
Type
Thailand - India Free
Trade Agreement
- 2 India and Thailand
Goods: 09-10-
2003
PSA
Comprehensive
Economic Cooperation
Agreement between
The Republic of India
and The Republic of
Singapore
ISCECA 2 India and Singapore
Goods and
Services: 01-08-
2005
FTA and EIA
South Asia Free Trade
Agreement
SAFTA 8
Afghanistan, Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan and Sri Lanka
Goods: 01-01-
2006
FTA
India Chile Preferential
Trade Agreement
ICPTA 2 India and Chile
Goods: 08-03-
2006
PSA

12. Contd
Trade Agreement Acronym
No. of
Member
Countries
Member Countries
Date of
Signature
Type
Agreement on Trade,
Commerce And Transit
Between the
Government of The
Republic of India and
The Royal
Government of Bhutan
- 2 India and Bhutan
Goods: 29-07-
2006
FTA
Indo-Nepal Treaty of
Trade
- 2 India and Nepal
Goods: 27-10-
2009
PSA
Comprehensive
Economic Cooperation
Between The Republic
Of India And The
Association Of South
East Asian Nations
India
ASEAN
TIG
11
Brunei, Cambodia, India, Indonesia,
Laos, Malaysia, Myanmar, Philippines,
Singapore, Thailand and Vietnam
Goods: 01-01-
2010, Service:
01-07-2015
FTA and EIA

13. Contd
Trade Agreement Acronym
No. of
Member
Countries
Member Countries
Date of
Signature
Type
Comprehensive
Economic Partnership
Agreement between
India and Korea
IKCEPA 2 India and South Korea
Goods and
Services: 01-01-
2010
FTA
Comprehensive
Economic Cooperation
Agreement between
The Government of
Malaysia and The
Government of The
Republic Of India
IMCECA 2 India and Malaysia
Goods and
Services: 01-07-
2011
FTA and EIA
Comprehensive
Economic Partnership
Agreement Between
Japan and The
Republic of India
JICEPA 2 India and Japan
Goods and
Services: 01-08-
2011
FTA and EIA

14. India: Evolution of Trade Agreements, 1948 - 2019
14
0
2
4
6
8
10
12
14
16
18
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Goods notifications Services notifications Cumulative Number of RTAs in force
16

15. India’s Partner Nations in Trade Agreements
15
Signatory of Trade Agreement with India
Non Signatory but WTO member
Non Signatory, WTO non member

16. Partners with Trade Agreements
16
Afghanistan
Algeria
Argentina
Bangladesh
Benin
Bhutan
Bolivia
Brazil
Brunei
Cambodia
Cameroon
Chile
China
Columbia
Cuba
Democratic People’s Republic of Korea
Ecuador
Egypt
Ghana
Guinea
Guyana
India
Indonesia
Iran Iraq
Japan
Laos
Libya
Malaysia
Maldives
Mexico
Morocco
Mozambique
Myanmar
Nepal
Nicaragua
Nigeria
Pakistan
Paraguay
Peru
Philippines
Republic of Korea
Romania
Singapore
South Korea
Sri Lanka
Sudan
Tanzania
Thailand
Tobago and Trinidad
Tunisia
Uruguay
Venezuela
Vietnam
Zimbabwe

17. RBI Study on Impact of Trade Agreements
17

18. Details of Study
18
Model based on GDP is used assuming, GDP of the partner country and GDP of India helps in
determining the size of the countries’ economy and hence the demand for commodities
Based on historical observation it tries to differentiate the trade linkages between member
countries and non-member countries
The hypotheses tested for this study relate to whether these agreements led to higher trade
generally and particularly how exports and imports have progressed.
The study utilises ‘difference in difference’ method to analyse the impact using panel data.
The Study titled ‘Foreign Trade Agreements: An Analysis’ was
published in the September 2019 edition of RBI’s Monthly Bulletin

19. ‘Difference in Difference’ method
19
This estimation tries to provide difference in average outcome (import and export) in the treatment group before
and after treatment minus the difference in average outcome in the control group before and after treatment
Treatment – Signing of the Trade Agreements
The study covers a total of 31 countries
Out of which 18 countries are part of
the treatment group
The treatment group consists of those
countries with which India has a Trade
Agreement
and 13 countries are part of the control
group.
The control group consists of countries
with which India does not have a Trade
Agreement

20. Impact of Trade Agreements on India’s Trade
20
inter-linkages between India and its Trade Agreement partners have strengthened with
a substantial and persistent upward trend in the last two decades
Analysis of India’s trade with its agreement partner and non-partner countries shows
that
India’s Trade
• Data are expressed
in logarithmic terms
• Left axis represents
log values
• Smaller bar indicates
higher linkage
FTA
countries
Non FTA
countries

21. Impact of Trade Agreements on India’s Imports
21
Imports
Imports from Trade Agreement partners have increased substantially compared to non-trade agreement partners
FTA
countries
Non FTA
countries

22. Impact of Trade Agreements on India’s Exports
22
Exports
• Analysis points towards better improvement in Exports with Trade Agreement countries.
• However, imports were at a faster pace as compared to exports
FTA
countries
Non FTA
countries

23. Analysis of Recent Trade Agreements
23
India has recently entered into trading agreements, viz., Japan, South Korea and ASEAN
where the ratio of India’s imports to exports has gone up post signing the agreement
ASEAN Countries - Indonesia, Thailand, Singapore, Malaysia,
Philippines, Vietnam, Cambodia, Brunei, Myanmar (Burma), Laos

24. Conclusions of the Study
24
This indirectly would
have contributed in
enhancing the
productive capacity
in the country
One positive impact
of Trade Agreements
has been in the form
of increased
shipments of capital
goods and industrial
supplies from trade
partner economies.
However, the
increase in exports
could not keep pace
with the spurt in
imports.
After the conclusion
of the Trade
Agreements, growth
in trade flows was
witnessed between
India and the partner
countries.

25. India’s Trade Statistics
25

26. Value of India’s International Trade [1988-2018]
26
33.22
38.76
41.74
37.41
45.16
45.54
54.98
68.29
72.58
76.22
75.63
86.93
95.30
94.55
107.55
131.79
174.89
241.21
299.41
364.54
497.57
443.17
570.44
763.89
778.54
802.66
776.91
655.13
617.03
738.42
940.24
0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
900.00
1,000.00
In USD Billion [Imports + Exports]
In value terms, India’s total trade in the last three
decades with the world has increased substantially

27. India’s Balance of Payments [1988-2018]
27
Balance
in USD
Billions
Negative Balance with Partners
Positive Balance with Partners

28. Top Trading Partners - 2018
28
Export
Import

29. 29
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