Free Trade Agreement opens new horizons for India
India has signed a Free Trade Agreement (FTA) with four European countries. According to the document, the latter plans to invest USD 100 billion in the growing economy of the South Asian country.
The deal is an essential step for India. It will strengthen New Delhi’s position in Europe and give a solid boost to the market. It is worth noting that India was actively negotiating with Britain for two years, but the UK never signed the agreement. Meanwhile, the Republic has established a free trade zone with other non-EU countries:
– Iceland;
– Norway;
– Switzerland;
– Liechtenstein.
India has been negotiating to join the FTA for 16 years and regards signing the documents as a significant achievement. Under the terms, the country will have to eliminate several trade tariffs. The first is on imports of manufactured goods from the designated European countries. In return, the latter promised to channel investment into the Indian economy within 15 years. The funding should affect:
– the engineering sector;
– the manufacturing sector;
– the pharmaceutical sector.
The agreement will also help strengthen India’s ties with the European Free Trade Association. It also improves customs control procedures. This will make export/import processes efficient for all parties involved.
India’s prospects
India is one of the world’s fastest-growing economies. It is one of the top five economies in the world in terms of GDP. Despite global processes, the Indian market continues to show good progress.
At the beginning of 2024, Moody’s revised its economic growth forecast for the country. The reason for the improvement was the strong performance in the previous period. India’s GDP should grow by 6.8% this year. Previously, analysts had predicted economic growth of 6.1%.
The country recorded a growth rate of 8.4% in the fourth quarter of 2023. This was a record for the last 1.5 years.
According to Moody’s estimates, India will take first place among the G20 countries regarding economic growth dynamics in the current period.
The key drivers of growth highlighted by the analysts are:
– increase in car sales;
– growth in consumer activity;
– high revenues from taxes on goods and services.
In addition, India has recently seen strong growth in the credit sector. In turn, the government is emphasising infrastructure and manufacturing development more. These efforts will keep economic momentum high.
As far as the banking sector is concerned, no revision of targets is expected. The policy rate remains stable at 6.5%. Meanwhile, inflation has fallen to 5.1%.
