India’s FTAs utilisation rate is only 5-15%: FIEO

India has signed 16 FTAs with different countries but utilisation rate is very low.

The Dollar Business Bureau

The utilisation levels of India’s free trade agreements (FTAs) lie between 5% and 15%. This is the lowest rate of FTA utilisation in the world which is mainly due to the country’s import competitiveness, Ajay Sahai, Director General and CEO of Federation of Indian Export Organisations (FIEO) said.

Ajay Sahai was speaking at the Power Series Conclave 2016-17, organised by The Dollar Business under the theme - Why Make‘in’g India, an export manufacturing superpower, is the need of the hour.

So far India has signed 16 FTAs with different countries but the utilisation levels are very low when compared to other countries. This would benefit the countries with whom India has signed the FTAs, Sahai said.

Expressing similar views, Anil Rajvanshi, Head - Corporate and Industry Affairs, Reliance Industries Ltd said, “Recently, India has signed an FTA with Korea. This is advantageous to that nation but India has least utilisation through this pact.” Rajvanshi is a member of Government of India’s Board of Trade, and also the Chairman, Synthetics and Rayon Export Promotion Council.

Ajay Sahai  remarking on the new Foreign Trade Policy said, Indian government aims to double the country's goods and services exports to $900 billion by 2020 from the current $450 billion. To achieve this ambitious target, the country’s manufacturing growth should be improved. Only the manufacturing sector can sustain exports from India, he said.

Suggesting the steps to boost exports from India, he said, “Government of India should provide line of credit to the emerging countries to enhance exports. The country is losing export orders due to this. Other countries that offer line of credit are taking advantage of this in getting more orders.”

He further said, “Special economic zones (SEZs) are encouraging exports in China because of the infrastructure developed around them. Only IT SEZs are successful in India and the rest are still under developed. Along with the SEZs, we should also develop the infrastructure in the country.”

The logistics cost is estimated to be roughly around 14% of the country’s gross domestic product (GDP). The country should improve its infrastructure, particularly the inland waterways, to reduce the transportation cost within the country, he added.

He recommended to tap the e-commerce market to unleash the export potential in the country. He identified few thrust areas for exports from India that include automobiles, food processing and pharmaceutical sectors. He also said that Defence and Aerospace sector is an emerging sector to boost exports from the country.

The Dollar Business Bureau - Jun 23, 2016 12:00 IST