Utility of Regional Trade Agreements? Experience from India’s Regionalism

Abstract

In the last decade India’s trade policy has focussed on trade liberalization through Regional Trade Agreements (RTAs). This article poses the question whether RTAs benefit the trader, the ultimate user of such agreements. From a primary survey of Indian certifying agencies the article finds four interesting facts: (a) even though ISFTA is used mostly by Indian exporters, utilization rate for ISFTA is as low as 11 per cent; (b) SAPTA is preferred more than SAFTA, despite wider coverage of the latter; stricter Rules of Origin under SAFTA may be the reason; (c) Indian exporters export a lot to Singapore but not through the RTA, even though Singapore has given tariff-free entry to all Indian exports; low tariff preference margins, coupled with costs of proving origin, may be the reason for such low utilisation; (d) the whole gamut of RTAs has not been of much use to Indian exporters—the GSP is utilized much more (96 per cent of issued CoO) by Indian exporters than all of India’s RTAs put together