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Free Trade Agreements (FTAs) are playing a key role in diversifying India's trade, but they must be viewed as a two-way mechanism where imports are as important as exports for building competitiveness, NITI Aayog Vice-Chairman Suman Bery said on Monday.
"FTAs are not a one-way street, nor should they be," Bery said, adding that "in the way that we are seeing them as a tool for market access, others are seeing it as a tool for market access to us." Speaking during the release of NITI Aayog's latest 'Trade Watch Quarterly' report, he highlighted the importance of imports in strengthening the domestic industry. "For trade economists, imports matter much more than exports... it's imports that force you to be competitive," he said. Bery noted that India's trade performance has remained resilient despite global uncertainties. "Merchandise trade has been resilient in a tough environment... and... services trade continues to be strong," he said, adding that "in a very confusing year... for us to come out... resilient, speaks to a number of things." He also stressed the need for India to move up the value chain through design and branding. "India's next stage [is] about design and design-intensive production... design, branding... are the ways in which you gain a niche in the market," he said. Using the gems and jewellery sector as an example, Bery pointed out changing global consumer preferences. "The Indian consumer is very committed to 23, 24 karat jewellery, but... if you go to... Dubai... they are often marketing 14 karats just because that is what the market wants," he said, adding that Indian firms need to "recognise there's a world out there which is not the same world as the world you have here." NITI Aayog Member Arvind Virmani also emphasised diversification as the key strategy in a volatile global environment. "In this age of global uncertainty and external shocks, I think the keyword is diversification," he said. Explaining the role of FTAs, Virmani said, "the whole idea of FTAs is to diversify to meet this pattern... you have to look at the markets," adding that diversification depends on understanding global demand rather than just domestic supply capabilities. He noted that India's export diversification is already improving. "The HHI index is showing an increase in diversification... so it is happening," he said. In the gems and jewellery sector, Virmani highlighted the need to adapt to changing demand patterns. "We assume that gems and jewellery are the same everywhere. They are not," he said, noting that firms are now "diversifying into artificial jewellery" to tap new markets. He added that diversification requires investment in technology and skills. "You have to get a whole bunch of new machinery... you have to train the workers," he said, pointing out that "tariffs on machinery are also a cost of capital." NITI Aayog's latest 'Trade Watch Quarterly' report analyses India's trade trends and highlights the need for deeper integration with global markets while improving competitiveness across sectors. (ANI)
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