India should audit FTAs, adopt sector-based investment screening amid global fragmentation: Report
New Delhi, June 4
India should reassess the effectiveness of its existing Free Trade Agreements, modernise its investment screening framework and adopt a more coordinated trade and industrial policy approach as geopolitical tensions and economic fragmentation reshape global commerce, according to a report by Koan Advisory Group in association with Chintan Research Foundation, Information Technology Industry Council and Institute of Chinese Studies.
The report, "Resilience in a Fragmenting World: India's Economic Relations with Great Powers", is based on a series of consultations involving policymakers, industry representatives and civil society stakeholders on India's economic engagement with the United States and China.
The report argues that India must move beyond reactive policymaking and pursue a strategy centred on calibrated partnerships, stronger institutional coordination and clearly defined market access objectives.
One of the key recommendations is for India to conduct a comprehensive audit of its existing FTAs to determine whether they have delivered intended outcomes in terms of exports, market access and supply chain resilience. The report notes that some trade agreements have contributed to rising imports without commensurate gains in exports, while others have become channels for transhipment.
"Trade agreements cannot be treated as ends in themselves. India needs a clearer understanding of what each agreement delivers in terms of market access, supply-chain resilience and industrial capacity. In a more uncertain and protectionist world, evaluating whether our FTAs have met their objectives becomes even more important," said Shishir Priyadarshi, President, Chintan Research Foundation.
The report also highlights the need for India to secure greater market access through future trade agreements, utilise bilateral investment treaties more effectively and strengthen engagement with multilateral institutions such as the World Trade Organization.
On economic engagement with China, the report recommends moving away from broad geography-based restrictions towards a sector-specific investment screening mechanism grounded in national security considerations. It suggests that India should continue to utilise Chinese capital and technology in non-strategic sectors while strengthening safeguards in sensitive areas.
According to the report, India's manufacturing ambitions in sectors such as electronics, clean energy and advanced technologies remain closely linked to global supply chains that include Chinese components and investment. It therefore advocates a phased strategy to reduce vulnerabilities rather than abrupt decoupling.
"India faces the dual challenge of reducing strategic vulnerabilities while sustaining manufacturing growth and competitiveness. That requires moving beyond blunt restrictions toward a more calibrated framework that distinguishes between legitimate national security concerns and economically productive investment," said Dr Deep Pal, Director, Geopolitics and Policy at Koan Advisory Group and one of the report's authors.
The report further calls for better alignment between trade, industrial and tax policies, rationalisation of non-tariff barriers such as Quality Control Orders, modernisation of India's Bilateral Investment Treaty framework and broader policy consultations involving startups and smaller businesses.
It also identifies opportunities in emerging sectors such as artificial intelligence and data infrastructure, recommending deeper technology partnerships with the United States and stronger safeguards against disruptive export controls.
The report says amid geopolitical disruptions, supply-chain pressures and uncertainty in global trade governance, India will need to make deliberate choices about the markets, sectors and partnerships it prioritises in order to balance economic openness with strategic resilience.
— ANI
Reader Comments
The sector-based investment screening for China is a good middle path. We can't afford to completely cut off Chinese components in electronics or solar panels right now, but we also can't let them dominate strategic sectors like defence or telecom. Calibrated approach is smart.
Interesting read. As someone who worked in trade policy in the US, I see India learning from other countries' mistakes. The idea of "phased decoupling" rather than abrupt cutoffs seems practical. Globalization isn't dead, but it's definitely becoming more selective.
My biggest worry is that these "audits" and "assessments" will just become another layer of bureaucracy. We have enough red tape already. Instead of just another report, we need actual implementation. Look at how quickly SEZs were promised vs delivered. 😐
Very relevant for small businesses and startups! The report mentions consulting them. FTAs are usually negotiated by big industry lobbies, but the little guys face the real pain from import surges. Hope the govt takes these recommendations to heart.
The China part is spot on. We can't be naive and let them flood our market, but we also can't pretend our entire electronics ecosystem won't collapse overnight without Chinese parts. The key is identifying which sectors are truly strategic. Let's build our own supply chains step by step. 🙏
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