India Explores New FTA Negotiations with New Zealand and South Africa
Intending to strengthen its economic ties and enhance its trade relationship with New Zealand and South Africa, India plans to soon start new free trade agreement (FTA) discussions with these nations, two officials aware of the matter told Mint. This strategic move is part of India's broader effort to diversify its trade partnerships and reduce its dependency on traditional markets.
Scope of Trade Ties
India already shares robust trade relationships with New Zealand and South Africa, a key constituent of the South African Customs Union (SACU). A comprehensive FTA with these countries would further help India diversify its trade relationships and strengthen its position in the global economic order.
Renewed Negotiations with New Zealand
"New Zealand has reached out to us for FTA talks. We are taking it with priority," said one of the officials, requesting to remain anonymous. The official emphasized that the geopolitical landscape has shifted, with developed economies now keen on forging trade alliances with India, recognizing it as one of the fastest-growing major economies.Until 2015, India was negotiating a comprehensive FTA with New Zealand, but the talks were paused as both countries shifted focus to the Regional Comprehensive Economic Partnership (RCEP) agreement. With India exiting RCEP, negotiations with New Zealand can potentially resume.
Strengthening Ties with South Africa
"We are also exploring the possibility of initiating trade negotiations with South Africa, a key member of SACU, to broaden our trade portfolio," noted the official. Direct engagement with South Africa is essential for advancing towards a comprehensive trade agreement, given the historical challenges in progressing discussions with SACU.
Current Trade Statistics
According to data from the commerce ministry, India's exports to New Zealand dipped by 1.73% to $538.33 million, while imports from New Zealand dropped by 29.89% to $335.14 million in FY2023-24. The total bilateral trade between the two countries decreased by 14.82% from the previous fiscal to $873.47 million.In contrast, exports to South Africa grew by 2.7% to $8.71 billion in FY2023-24 from the previous year, while imports saw an uptick of 8% to reach $10.54 billion. The total trade volume between the two countries for the year amounted to $19.25 billion, reflecting a 2.3% increase from the previous fiscal year.
Future Prospects
India has already signed FTAs with several countries, such as Japan, South Korea, Australia, and the European Free Trade Association (EFTA) countries, facilitating increased trade flows, investment, and economic cooperation. New Delhi is also negotiating FTAs with Oman, ASEAN, the European Union, and other nations. Experts anticipate that India may be able to complete or be near to completing FTAs with major economies except China by the end of this year.
Conclusion
As India seeks to enhance its trade relationships and economic influence globally, the renewed FTA negotiations with New Zealand and South Africa represent strategic moves towards diversifying trade partnerships. These discussions, if successful, could significantly boost India's trade volumes and economic cooperation with these nations, reinforcing its position in the global economic order