Ministry may soon tap Cabinet for green flag on FTA SOPs as new guidelines nearly ready

New Delhi: The commerce and industry ministry will soon seek Cabinet nod for the standard operating procedure (SOP) for negotiating its free trade agreements (FTA) and address new issues — labour, environment, digital services, gender and indigenous peoples and has temporarily paused some new trade pacts.

Officials said a review of India’s trade pact with the UAE in two years after it came into force and a rise in sustainability measures being imposed by the US and the EU, have led the government to develop a new FTA strategy.

These guidelines will be based on reciprocity and stronger rules of origin to prevent Chinese products entering India by misusing any of the trade pacts. “The SOPs are almost ready and we will go to Cabinet for its approval,” said an official. The SOPs assume significance as India is negotiating trade pacts with the UK, the EU, Peru, Oman, Chile and a comprehensive trade deal with Australia. It is also in talks with the Eurasian Economic Union for a trade agreement. New Delhi is cautious of any misuse of rules of origin norms leading to circumvention and imports entering the country, similar to the UAE (United Arab Emirates). India has seen a sharp increase in UAE’s exports of silver, platinum alloy and dry dates. “Many products originate in China but come through other countries. So, stricter rules of origin and melt-and-pour norms are crucial apart from value addition,” said the official. Besides detailing the ways to negotiate market access issues and tackle non-tariff barriers, the SOPs will set out a strategy for new issues such as sustainability in trade deals and the market access that needs to be given to the potential FTA partners, especially smaller countries. “In some of our FTAs, we have given more access. Reciprocity is important and the strategy is to see how much we open up because we’re a huge market,” the official said, adding that detailed study needs to be carried out on the proposed FTAs without rushing into them and their possible long-term impact on India.

The country has inked trade pacts with Mauritius, the UAE, Australia and European Free Trade Association since 2021. India’s goods exports in AprilSeptember FY25 were $213.22 billion, up 1% on-year. The SOPs will also look at technical issues such as capacity building, utilisation of the various FTAs, leveraging the trade pacts to address new forms of measures such as supply chain disruptions, on-the-spot drafting requiring mechanisms to draft agreements in real-time during negotiations to ensure clarity and immediate consensus, and how the negotiators can ensure that commitments undertaken are pre-approved.