India does not have any significant free trade agreement with prosperous markets in the world

Last week India was swamped by several senior leaders from the immediate neighborhood. First there was a host of bilateral meetings between visiting foreign ministers of five central Asian countries neighboring Afghanistan. These leaders also revived the India-Central Asia dialogue and met with the Indian prime minister, discussing regional issues of safety, security, stabilization of Afghanistan, and improving bilateral ties. Around the same time, Vuong Dinh Hue, President, National Assembly of the Socialist Republic of Vietnam, along with a Parliamentary delegation, was holding conversations with senior Indian leaders in New Delhi. The year 2021 also marks the golden jubilee of India establishing diplomatic ties with Vietnam. The External Affairs Minister rightfully pointed out that "as political and security partners, India and Vietnam have converging interests in a multi-polar and rebalancing world". Vietnam ascended to the international trade body WTO in 2007 and ever since has amalgamated with global trade rhythms and rules and signed several free trade agreements (FTAs) bringing bounties for this relatively smaller nation. This south-east Asian country, ravaged by internal unrest and foreign attacks, has developed into one of the most promising investment destinations for all across the globe. This has been strategically made possible by carefully using bilateral and multilateral trade agreements as assets to its advantage. Consider this, Vietnam, an erstwhile communist state, has a flourishing trade agreement in place with many countries across the world. That it has successfully managed to negotiate trade deals to its advantage either as an individual country, like the EVFTA (Europe Vietnam free trade agreement) with Europe, or, as a member to a regional multilateral forum such as ASEAN and RCEP, speaks a lot about the sharp achievements by this country in few years. An FTA is an agreement between two countries or a country and regional/trading block which sets the ground rules of tariffs and duties for entry and exit of goods and services into each other's territories. One of the key factors that has facilitated any country to avail benefits of market access into lucrative geographies is by allowing mutually complementary conditions in domestic markets to trading partners. Most of these ultimately boil down to tariff and non-tariff barriers. Direct tariffs imposed by countries on entry of imported goods and non-tariff(barriers) constitute those dealing with regulatory practices, both taken together form the entire complex universe of free trade agreement negotiations. India does not have any significant free trade agreements with any prosperous market in the world due to the complex mix of domestic and global lobbies influencing each other.

India is considered one of the highest tariff nations on the world trade table with some for the most complicated and often repetitive regulatory practices and compliances. A telecom infrastructure equipment, not currently manufactured in the country, when imported. may have to undergo a compliance and safety test in multiple labs around the country before it can be certified fit for use. Most of the labs would be guided by their own regulatory practices and will have separate clearance timelines. Labor laws and land acquisition, investment guarantee are other key factors which impact the sentiments. This brings one back to India and Vietnam both of which are on different trajectories on the trade front. However, they are extremely important for each other in the strategic Indo-Pacific Region. India referred to increasing mutual trade with Vietnam from $10 bn in 2020 to $12 in 2021 and reiterated the need to promote resilient, reliable and trusted supply chains but with a no trade agreement in place, it would be a tough task.

(The writer is a policy analyst. The views expressed are personal.)