The Economic Survey has rapped the Government —grappling with rising trade deficit -- for not extracting more from the regional trade agreements implemented so far.
India needs to bargain more to export more and protect livelihood concerns and not be guided just by geo-political considerations, it said.
Increasing exports despite the adverse global climate is the only way to rein in trade deficit, the Survey emphasised and proposed measures such as infrastructure creation, trade facilitation, tax & tariff relief, addressing inverted-duty structure and adequate credit for boosting exports.
Very little help could be expected on the import front to bridge trade deficit as high global prices for oil and gold would ensure that import moderation will be limited.
“The twin deficit going out of control is indeed a big cause for worry. The problem is that India has not pro-actively taken advantage of market openings and trade deals and has more or less put things on auto-pilot,” said Biswajit Dhar, Director General, Research & Information System.
The trade deficit was at an alarming level of 10.8 per cent of GDP in the first half of 2012-13 compared to 9.9 per cent of GDP in the same period of last year. The highest current account deficit of 5.4% of GDP in the third quarter of the fiscal is also pointing at a possible balance of payment crisis.
“We have to focus on how to take advantage of the import duty concessions that we are offered by our RTA partners by disseminating more information to our industry sand also work out better deals,” Dhar said.
India has already implemented trade pacts with partners such as the ten-member Asean, Singapore, Thailand (a limited pact), Sri Lanka, South Korea and Japan.
It is about to finalise a comprehensive trade pact with the European Union covering goods, services, investments and government procurement.
“With multilateral trade negotiations stalled, and RTAs on the rise, India also has to follow a strategic regional trading policy focusing on the potential technology-intensive items in the more important RTAs,” the Survey said.
Though geopolitical considerations are important, India may have to bargain more in its regional trade negotiations, particularly in cases where livelihood concerns of large pockets of the population are involved, it added.