India strengthens its strategic ties with trading partners to revitalize retail trade
11 June 2021: India is focussing on strengthening its economic ties with the European Union and the US among others to boost bilateral trade. India’s commitment to enhance its strategic alliances will not only increase its presence globally but will also bring positivity and encouragement among the domestic manufacturers who are struggling with the weakened demand of goods and services, says GlobalData, a leading data and analytics company.
In May 2021, Indian Prime Minister Narendra Modi attended a virtual meeting with 27 European Union (EU) leaders to resume negotiations on the long-stalled Free Trade Agreement (FTA), connectivity partnership, sustainable development and digitalization. The move will help India to strengthen its ties with the EU in the fields of health, connectivity and trade. The EU being India’s largest trading partner, the cooperation will have integral trade implications.
Following Brexit, India and the UK have also agreed to a new Enhanced Trade Partnership (ETP), along with a common goal of doubling trade by 2030.
Ankita Roy, Retail Analyst at GlobalData, comments “A renewed focus on India-EU ties will boost the growth momentum of the Indian economy, which has slowed down due to pandemic-induced business and trade restrictions. The deal brings positive news for textile, garment and leather manufacturers to export at lower tariffs and get access to the EU duty-free markets. The move will also help India to protect its domestic apparel manufacturing base which has been facing strong competition from countries such as Bangladesh and Vietnam as they enjoyed preferential tariff treatment.”
In March 2021, Indian Government announced a ‘fresh package’ to the US Trade Representative (USTR) under the Biden administration. India proposed to expand the trade ties for both products and services through the removal of non-trade barriers and other mutual recognition agreements. Furthermore, the US, India, Japan and Australia engaged in resolving the issue of Chinese influence by strengthening trade relations among themselves.
Ms Roy concludes: “While India battles the second COVID-19 pandemic wave, its efforts to operationalize its global ties will pave way for economic growth in the long run. As China’s bilateral trade soured with its major trading partners including the US in 2020, there exists a huge opportunity for India to capitalize on the situation and strengthen its trade relations with major partners such as the US, the EU and other ASEAN countries. This will help in reviving the Indian economy, give a boost to the export-oriented industries and establish diplomatic relations at a global level.”