Context
Recently the Confederation of Indian Industries (CII) and the Ministry of External Affairs organized the business summit of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).
About
- BIMSTEC has been negotiating a proposed Free Trade Agreement (FTA) since 2004, with 22 rounds of talks held so far consisting of the final spherical that was held in 2018.
- The Union Minister of Commerce & Industry that BIMSTEC individuals have to re-look at the priorities of member countries in order that the delayed Free Trade Agreement may be finalized.
- In 2004, Bimstec concluded the Framework Agreement on the Bimstec Free Trade Area.
- The Framework Agreement recommended the established order of powerful trade and investment facilitation measures, inclusive of simplification of customs strategies and improvement of mutual popularity preparations
What is BIMSTEC?
- BIMSTEC is a regional organisation that was established in 1997 with the signing of the Bangkok Declaration.
- Permanent Secretariat: Dhaka, Bangladesh
- Members: Bangladesh, Bhutan, Sri Lanka, Nepal, Thailand, Myanmar and India.
- Significance: The BIMSTEC nations are home to 22 percent of the total international population and feature a gross domestic product (GDP) of about $3.6 trillion.
India’s trade with BIMSTEC
- India’s overall trade with BIMSTEC countries amounted to $44.32 billion in 2023-24.
- Thailand was India’s largest trading partner within the bloc, with exports worth $5.04 billion and imports at $9.91 billion, resulting in a trade hole of $4.87 billion.
- Bangladesh accompanied, with exports of $11.06 billion and imports of $1.84 billion, developing a trade stability of $9.22 billion in India’s favor.
What Is a Free Trade Agreement (FTA)?
- A free trade agreement is a share between two or more nations to lessen limitations to imports and exports among them.
- Under a free trade coverage, goods and services may be bought and offered across global borders with very little government tariffs, quotas, subsidies, or prohibitions to inhibit their trade.
- India has signed thirteen Regional Trade Agreements (RTAs)/Free Trade Agreements (FTAs) with numerous countries/regions specifically, Japan, South Korea, countries of ASEAN region and countries of South Asian Association for Regional Cooperation (SAARC), Mauritius, United Arab Emirates and Australia.
Benefits of BIMSTEC free trade agreement
- Increased Trade Flows: An FTA could reduce price lists, non-tariff barriers, and different regulations on trade, thereby growing the extent of products and offerings traded among BIMSTEC nations.
- Economic Integration: The FTA ought to result in deeper economic integration, fostering nearer economic ties and improving local stability.
- Market Access: Member states could gain access to each other’s markets, which could assist smaller countries like Bhutan and Nepal combine more correctly into the worldwide economic system.
- Attraction of Foreign Direct Investment (FDI): A more integrated market with decreased trade boundaries would be more appealing to overseas investors, probably increasing FDI flows into the region.
Way Ahead
- The business network of the countries and the governments will ought to paintings together to locate new pathways, new methods of engaging, and opportunity solutions which can be more realistic to build up the momentum in the direction of an FTA
- Payments in regional currencies within this location at the side of higher integration of custom borders, computerisation of border controls, and faster clearance of files for imports and exports can help to improve the situation.
Source: The Hindu
UPSC Mains Practice Question
Q. Do you think that BIMSTEC is a parallel organisation like the SAARC? What are the similarities and dissimilarities between the two? How are Indian foreign policy objectives realized by forming this new organisation? (2022)