Lok Sabha Question No. 427 (UNSTARRED), answered on 2025-02-04
Subject: Impact of Free Trade Agreements on Domestic Industries
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri Saptagiri Sankar Ulaka

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 427 ANSWERED ON 04/02/2025

## IMPACT OF FREE TRADE AGREEMENTS ON DOMESTIC INDUSTRIES

## 427. SHRI SAPTAGIRI SANKAR ULAKA:

Will the Minister of COMMERCE & INDUSTRY ( वाणिज्य एवं उद्योग मं त्री ) be pleased to state:

(a) whether  the  Government  has  assessed  the  impact  of  Free  Trade  Agreements  (FTAs)  on domestic industries, particularly Small and Medium Enterprises (SMEs), since 2020, if so, the details thereof;

(b) the details of challenges identified under these FTAs and the details of measures taken by the Government to address them or concerns arising from the FTA for these sector;

(c) the details of current status of studies evaluating the economic impact of FTAs between India with the European Union (EU) and United Kingdom (UK) and key developments in the ongoing negotiations;

(d) whether the Government have any proposals to include provisions for the ease of mobility for Indian professionals as part of the FTA;

(e) if so, the details of specific steps/measures taken by the Government are being considered to  facilitate  the  movement  of  Indian  professionals,  including  visa  provisions,  recognition  of qualifications, and other related aspects; and

(f) whether a mechanism exists to monitor the long-term effects of FTAs on employment and industry growth and if so, the details thereof?

## ANSWER

## वाणिज्य और उद्योग मंत्रालय में राज्य मंत्री (श्री णिणिन प्रसाद)

## THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SHRI JITIN PRASADA)

(a) to (f) The assessment of impact of Free Trade Agreements (FTAs) is a continuous process. A Joint  Study  Group  (JSG)  is  normally  set  up  to  study  the  feasibility  of  the  proposed  FTAs, including  their  impact  on  the  domestic  industry,  especially  small  and  medium  enterprises. Stakeholders  including  industry  representatives,  Apex  Chambers  of  Commerce  and  Industry, Industry  Associations  as  well  as  the  Administrative  Ministries  and  Departments  are  consulted from time to time. In order to protect the interests of the domestic industry, including small and medium enterprises, FTAs provide for maintaining sensitive, negative or exclusion lists of items on which limited or no tariff concessions are granted. In addition, in case of surge in imports and injury to the domestic industry, a country is allowed to take recourse to trade remedial measures such as anti-dumping and safeguards on imports within the period as mutually agreed to by the parties under the FTAs.

Comprehensive studies have been conducted to evaluate the economic impact of India the European Union (EU) Free Trade Agreement (FTA) and India - the United Kingdom (UK) FTA.  EXIM  Bank  assessed  the  India-EU  FTA's  effects  on  production,  exports,  imports,  and employment, while an ex-ante study for the India-UK FTA was undertaken in collaboration with other  institutions.  The  negotiating  positions  for  both  agreements  have  been  shaped  through extensive  consultations  with  stakeholders,  ensuring  a  strategic  approach.  Negotiations  are progressing with a focus on key areas of mutual interest to achieve a balanced and beneficial trade deal.

In the Free Trade Agreements (FTAs), Government has pursued best terms of treatment in respect of market access and national treatment for its service providers who supply services through movement across the border. In addition, the Government has taken steps for facilitation of movement of service providers through ease of temporary entry, grant of visas and recognition for  Indian  professionals  through  separate  provisions  on  Entry  and  Temporary  Stay  of  Natural Persons; and on Professional Services as part of the Trade in Services Chapter and its Annexures in the FTAs.

The FTA Monitoring Committee under the Department of Commerce (DoC) oversees the impact of FTAs through regular industry feedback on employment and industrial growth. This helps address import-related issues such as rule violations and unfair trade practices, as well as export  challenges  like  FTA  underutilization  and  non-trade  barriers.  Additionally,  the  DoC conducts  FTA  assessment  studies  as  needed  for  review  and  to  guide  future  negotiations.  By raising  awareness  and  proactively  addressing  the  concerns,  the  committee  supports  industry leverage FTAs for growth and job creation.

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