Commerce and Industry Minister Piyush Goyal has said that a fear-psychosis has been created against free trade agreements (FTAs) by some that needs to be overcome if India has to avoid global isolation.
"While negotiating FTAs India has in mind the interests of its people that cannot be compromised.... But the fear psychosis around FTAs has to go....An FTA has to be win-win for both sides," said Goyal while releasing the report of the High Level Advisory Group (HLAG) on Trade constituted by the Centre on Wednesday. The event was organised by CII.
The panel, set up by the Commerce Ministry under the chairmanship of economist Surjit Bhalla, has come up with a slew of recommendations to boost exports and investments such as increasing authorised capital of the Exim Bank by a minimum of ₹ 10,000 crore, strengthening exports of labour-intensive sectors and ICT products, putting in place a national trade facilitation action plan and simplifying regulatory and tax framework for foreign investment funds and individual investors.
The HLAG was set up to assess the global environment and make recommendations for boosting India’s share and importance in global merchandise and services trade, submitted its report to the government on Wednesday.
The report stressed on the need to strengthen the Exim Bank of India to cope with the increasing needs of Indian exporters and support India’s stagnant exports.
“In order to achieve an estimated aggregate growth level of 20% p.a., the balance capital (authorised capital less paid-up capital) of ₹ 6,141 crore needs to be infused by the Centre over the subsequent two years ending March 31 2022.The authorised capital is to be simultaneously increased by a minimum of ₹ 10,000 crore by March 31, 2022, the report said. It also suggesting enhancing the bank’s borrowing limit.
On Foreign Trade Agreements (FTAs), the panel suggested that every FTA must be conceived with a view of achieving national objectives and not driven by narrow considerations, sometimes even driven by political expediency. “While negotiating market access for goods in FTAs, India should focus on both tariffs and non-tariff barriers in the partner countries. In services, India should go beyond Mode 4 (movement of persons), and also focus on Mode 3 (commercial presence), as Indian investors have an interest in investing in the FTA partner country,” the report said.
There is a need to establish an institutional mechanism for seeking inputs from stakeholders prior to finalising an FTA, as well as informing the industry well in time about any steps that they would like to take during the period of transition with the aim of minimising their adjustment costs, the report added.
For improvement in off-shore fund management, the report proposed that there needs to be a revision in eligibility conditions such as aggregate participation/investment by Indian residents in an offshore fund shall not exceed 5 per cent of the fund corpus and that the fund manager is not an employee or connected person of the offshore fund.
To attract more foreign investments, the report proposed replacing the existing regulatory and tax framework with a number of forward looking measures. This includes allowing a foreign investor entity and the fund manager the freedom to operate from any physical location as long as the entity in question is registered with a regulator who is a member of IOSCO or a regulator with whom SEBI has a bilateral agreement or MoU.