Foreign trade is important to India. This requires clear and fair trade rules. That is why India concludes trade agreements with countries all over the world. These treaties regulate, for example, lower import duties and flexible customs formalities like there are some exemptions to this under schemes such as the Advance Authorisation Scheme in India. Companies can thus trade more easily, cheaper, and more efficiently. Consumers pay lower prices and can choose from more products.

Importance of trade

Trade is important to India with its open economy. Many Indian companies, large and small, do business abroad. Other companies are suppliers to exporting companies. For example, India is one of the largest exporters of agricultural products in the world. Exports provide 1/3 of prosperity and 5.1 million jobs.

Imports are also important. Many Indian companies import products for the processing of finished goods. After that, these products are often re-exported. The businessman can import duty-free machinery and other capital goods under  EPCG Scheme.

Importance of clear and fair trade rules

Clear rules are important for international trade. Because companies need to know where they stand when they trade abroad. Furthermore, the trade rules must be fair, so that as many consumers and companies as possible benefit from trade with abroad.  The RoDTEP Scheme that has replaced the MIES scheme in India also enables exporters to get reimbursement on various duties, taxes, and levies.

Clear trading rules

Clear trade rules ensure that entrepreneurs have certainty when doing business abroad. For example, which permits they need and which requirements their products must meet. Entrepreneurs also need protection against illegal expropriation by a foreign government. For example, when an entrepreneur’s foreign company is suddenly nationalized.

Fair Trade Rules

Fairtrade rules are inclusive: they allow as many people as possible to benefit from trade agreements. This also applies to small and medium-sized enterprises (SMEs). For example, SME entrepreneurs need to know how to make use of reduced rates in a trade agreement. Such as which documents are required for export and which rules their products must comply with. Involving stakeholders before and during the negotiation of a trade agreement is also important.

Fair, inclusive trade also means that it can limit negative consequences for sectors. Such as when the beef sector is disadvantaged by foreign competition and jobs can be lost. This sector could then be given time to adapt. Retraining of employees is another way of mitigating negative consequences.

Also attention for 3rd countries

Fairtrade rules are also important for countries outside a trade agreement. Therefore, when negotiating a trade agreement, the economic consequences for developing countries must be taken into account. For example, by mapping these consequences.
For instance, it may turn out that increased trade between partner countries is at the expense of their imports from third countries.

More topics in trade agreements

Agreements in trade agreements also cover other topics. For example about:

  • Relaxation and simplification of border procedures;
  • Safety testing of products entering the market. Countries can agree to accept each other’s tests as equivalent. Companies do not have to have their products tested in their own country and in the importing country. This saves them costs and administrative burdens. The condition is that the safety of the products remains guaranteed.
  • Sustainable development. Trade must not be at the expense of the environment, workers’ rights, or corporate social responsibility;
  • Government contracts: foreign companies are given the same opportunities as domestic companies on an order from the government;
  • market access for foreign shipping companies. These companies gain access to the market of countries that have signed a trade agreement. This allows them to transport goods within the area of ​​the trading partner.

Consumers benefit from trade agreements

Trade agreements contribute to economic growth and create jobs. This way they can choose from more products and pay lower prices. For example for electronics such as smartphones and televisions. But also for food products such as oranges and grapefruit.


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