TPP could impact India’s export market share

Singapore banking group says that India’s position on trade agreements is under scrutiny after the TPP agreement was signed by the 12 countries. The TPP implementation is not final yet as the lawmakers from the countries have to pass this agreement, but India’s patchy record on FTAs is feared to hurt their ambitions to double exports to USD 900 billion over the next 5 years.

http://www.india.com/business/tpp-could-impact-indias-export-market-share-singapore-bank-614999/

India has existing FTA with only 3 of the 12 countries in the TPP. DBS said that India has expressed plans to join the APEC(Association of South East Asian Nations), but has made little progress in that mostly they are focusing on other key pacts like the European Union.

However, India’s progress has been slow on FTA with the European nations. The Indian government has taken active interest to attract foreign investments and manufacturing facilities, but progress on bilateral and multilateral trade pacts has been tricky. A quarter of India’s merchandise exports headed to the US and ASEAN countries last year and another 4% to key Latin American markets. Concern is whether improved market access, tariff reductions and diversion might erode India’s market share. It is cited that India’s exports especially in textiles and leather products might face threats because Vietnam and Malaysia get cheaper access to the US and others in the deal.

As TPP will take years to implement the real impact may be smaller. The weak global demand backdrop, collapse in commodity earnings, domestic bottlenecks and government’s ambition to raise India’s share in global market to 3.5% by 2020 will be a uphill task considering the factors. So how much can India sustain this drop in trade? Or will they come up with trade pacts before the TPP is actually implemented?

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