Trade strategy: India should accelerate FTA talks with US, diversify exports, says EAC-PM chief Mahendra Dev

India should speed up free trade agreement (FTA) negotiations, expand its export reach beyond traditional markets, and maintain active engagement with Washington to conclude a Bilateral Trade Agreement (BTA) with the US, Economic Advisory Council to the Prime Minister (EAC-PM) Chairman S Mahendra Dev said on Friday.Delivering the First ISID@40 Distinguished Person Lecture, Dev said that despite global protectionist currents and shrinking international trade volumes, India’s export potential remains underutilised. “India’s trade policy for manufacturing should be to diversify exports to other countries in Asia, Latin America, Africa, some developed countries, fasten FTAs and to continue dialogue with the US,” he emphasised, PTI quoted.He said a rule-based global trade framework under the World Trade Organization (WTO) remains far better than the rise of protectionist trade policies seen in recent years.Dev’s remarks come amid heightened friction between New Delhi and Washington following the US decision to penalise India for continuing crude oil imports from Russia. On October 22, the US imposed sanctions on Rosneft and Lukoil — Russia’s two biggest oil producers — effectively restricting American entities from engaging with them.

As a result, Indian exports now face a total tariff burden of nearly 50 per cent in the US — a combination of 25 per cent duties for oil imports from Russia and 25 per cent reciprocal levies on Indian goods entering the American market. New Delhi has condemned the move as “unfair, unjustified and unreasonable.”The EAC-PM chairman also underlined that sustained high growth for large emerging economies has always been tied to strong export performance.

“No emerging market of India’s size has grown at 7 or 8 per cent for a decade or more without strong export growth,” Dev observed.He argued that India needs a stronger base of medium-sized manufacturing firms employing between 200 and 500 workers, noting that most Indian enterprises remain small, with fewer than 10 employees.“In 1700 AD, India’s share in world GDP was 25 per cent. Some estimates show that by 2043, the share of India in world GDP is likely to be 25 per cent again,” Dev said, stressing that higher investment levels and productivity gains will be crucial to achieving that projection.He pointed out that India’s average annual growth rate has hovered between 6 and 6.5 per cent over the past three decades, adding that investment must rise from the current 31–32 per cent of GDP to 34–35 per cent to sustain 7 per cent growth.“Private sector investment should pick up now that there is no twin balance sheet problem. Government capex is rising, and it will have a multiplier effect,” he said, noting that stronger rural and urban demand will help drive the next investment cycle.Recalling the difficult years when India was grouped among the “Fragile Five” economies in 2013, Dev said the country has since regained resilience. “We have come out of the shocks and the Indian economy is resilient and fastest growing economy in the world,” he asserted.