India’s Trade Minister Flags Export Barriers: FTAs Fail to Clear India’s Export Path to Japan and South Korea

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India’s trade minister noted export challenges in South Korea and Japan despite free trade agreements. Factors such as regulatory barriers and local preferences hinder full FTA benefits. The government seeks to diversify exports and enhance trade facilitation to boost India’s presence in these key Asian markets.

India’s trade minister, Piyush Goyal has highlighted ongoing hurdles faced by Indian exporters in accessing markets in South Korea and Japan, despite the existence of free trade agreements (FTAs) with these countries. The statement underscores the complexities and non-tariff barriers that continue to impede smoother trade flows, calling attention to the gaps between formal trade commitments and ground realities.

Key Highlights:

Trade Barriers Persist: Indian exports encounter challenges such as stringent regulatory standards, complex customs procedures, and preferential treatment to local companies in South Korea and Japan, limiting the effective utilization of FTAs.

Underutilization of FTAs: Despite tariff concessions and market access arrangements under the India-Korea and India-Japan FTAs, Indian exporters have not fully benefited due to issues like certification requirements, quality standards, and delayed approvals.

Product-Specific Challenges: Textiles, leather goods, processed foods, and certain pharmaceuticals face particular difficulties in penetrating the Japanese market, while similar obstacles affect electronics, auto components, and chemicals exports to South Korea.

Competitive Landscape: Both South Korea and Japan have longstanding industrial bases and prefer local suppliers, making it harder for Indian exporters to gain significant market share.

Export Diversification Needed: The minister emphasized the need to diversify export products, especially labour-intensive goods such as garments, footwear, and toys, to tap into the large demand in these markets.

Supply Chain Restructuring: Indian exporters should align with global supply chain diversification trends, taking advantage of ongoing discussions on economic cooperation and trade facilitation.

Government Initiatives: India is actively engaging in dialogue with its trade partners to resolve these issues, including review meetings of FTAs and exploring dedicated support funds to incentivize exports.

Strategic Importance: Maintaining strong trade relations with technologically advanced economies like Japan and South Korea is crucial, given their role in foreign direct investment (FDI) and high-value trade sectors.

Trade Balance and Opportunities: Although India runs some trade deficits with these countries, opportunities exist in sectors like pharmaceuticals, organic chemicals, and certain agricultural products.

Future Pathways: Strengthening institutional support for exporters, improving product quality compliance, and negotiating more robust trade facilitation agreements are key steps forward.

The trade minister’s remarks spotlight the imperative for bridging the gap between trade agreements and practical export promotion to maximize India’s potential in these dynamic Asian markets.

Sources: India Briefing, PIB India, Economic Times, Facebook WION News

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