Context
Recently, India and Canada held the fifth Ministerial Dialogue on Trade & Investment (MDTI), where Ministers agreed to formally re-launch the negotiations for India-Canada Comprehensive Economic Partnership Agreement (CEPA).
- They will also consider signing an Interim Agreement or Early Progress Trade Agreement (EPTA) that could bring early commercial gains to both countries.
About India-Canada Trade
- Total bilateral trade between India and Canada including goods and services crossed $11 billion.
- Major Indian exports to Canada include drugs and pharmaceutical products, iron & steel products, marine products, cotton fabrics & readymade garments (RMG) while key Canadian exports to India comprise pulses, fertilizers, coal and crude petroleum.
Need for India to sign an FTA with other countries
- India is gearing up to finalize FTAs with the UK, Australia, EU, Canada and other major economies.
- The Economic Survey highlighted India’s need for FTAs as it will help it to diversify exports and explore new shores for the promotion of its products.
- According to a survey, 40% of India’s exports is limited to just seven countries.
- This indicates that India needs to do a lot more on widening its export basket and give a further push to promoting exports to new shores.
- Moreover, negotiations for FTAs are a part of India’s broader strategy to sign “balanced” trade agreements with key economies.
- This move gained traction after India pulled out of the Regional Comprehensive Economic Partnership (RCEP) talks in 2019.
About Regional Comprehensive Economic Partnership (RCEP)
- RCEP is a regional Free Trade Agreement between ASEAN and 6 other countries, viz. India, China, Japan, South Korea, Australia and New Zealand.
- It was finally signed in November 2020 after 8 years of negotiations.
- Last year, India walked out of the negotiations.
- Therefore, it is now an agreement between 15 countries.
- However, the members have said that the doors will be kept open for India to join the agreement at a future date of India’s liking.
- RCEP members constitute nearly a third of the global population and 29% of global GDP.
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