It could be the mother of all FTAs. The government on Wednesday said it was contemplating a bilateral trade pact with the US. "Bilateral trade agreements are currently in the pipeline with at least 10 potential partners ranging from ASEAN, EU, US and Canada," commerce and industry minister Kamal Nath said at the Pravasi Bharatiya Divas.

He touched upon negotiations with the US and Canada in a prepared speech, the text of which was circulated to the media. India has set a global engagement target of $550 billion, Nath said, compared to $450 billion at present which includes trade and investment flows.

It is not clear if US was pushing the agenda on a bilateral deal. But the verdict in India is unclear with even government departments opposed to an arrangement, where Washington is expected to insist on a treaty on investment.

The US in the past has demanded not just greater liberalisation but pre-investment national treatment, something that India has resisted so far. Under present norms, India is willing to accord the same status to foreign as well as local entities once global players have invested in the country.

Besides, a trade agreement could also open the doors for the US to seek more presence in sectors like banking and insurance, areas where Washington has adopted a tough posture and Indian banks find it tough to operate freely.

In the goods arena too, the US, which is the world's largest trader, is known for seeking steep tariff cuts that might not be favourable to the farm sector and be unpalatable for the industry and government.

In any case, domestic lobbies and policy pressures have restricted the government's ability to negotiate free trade agreements freely.

So far, India has only managed to sign bilateral trade deals with Sri Lanka, Singapore and a limited agreement with Thailand.

Mr. Neeraj Sharma

Neeraj Electronics

CEO, Neeraj Electronics
Jorhat, India

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