बेबाक · Editorial
Signing Trade Pacts Is the Easy Part; India Must Now Build the Capacity to Enforce Them
As the New Zealand pact takes effect and a US deal nears, India's trade gains will depend on enforcing and explaining the agreements, not on how many it signs.
A season of agreements
India's trade diplomacy is moving fast. The Union Commerce Minister and New Zealand's Minister for Trade and Investment have jointly announced that the India–New Zealand Free Trade Agreement enters into force on October 20. It brings duty-free entry for Indian goods and, according to the announcement, a pledged USD 20 billion of New Zealand investment over 15 years. Bilateral trade of $2.4 billion is projected to reach $7 billion by 2030. Meanwhile, the US Secretary of State, ahead of visits to Mumbai and Jamnagar, has described an India–US trade deal as "very close" to completion. The direction is welcome. An economy that wants manufacturing jobs needs open markets abroad. The harder question is whether India is ready to make these agreements work.
The tension underneath
Two pressures pull in opposite directions. One is speed: exporters want certainty, and partners want commitments. The other is sovereignty. Reporting on the long-delayed US talks lists several obstacles, including the US administration's tariff blitz, friction over India's energy imports, and Washington's warmer ties with Pakistan. The US Secretary of State's own words show the strain. Every country, he said, has a complex set of factors to take into account: "Geography is real," and for some countries it is very difficult to acquire energy from alternative sources. "That's not an excuse," he added, before acknowledging that all of this has to be weighed. Even the visit's itinerary has drawn questions from the opposition at home. A deal that is very close can still contain terms India should not accept.
Both sides, fairly stated
The case for closing quickly is strong. Tariff uncertainty hurts exporters. The New Zealand agreement shows that India can conclude pacts that open markets for its goods. Waiting for perfect terms with the United States may mean getting no terms at all. The case for caution is equally serious. Energy security is not a bargaining chip for a country of India's size and income level. Concessions on how and where India buys fuel could fall hardest on ordinary households, not on negotiators. Partners who see India as a market must also treat it as a peer. Both arguments rest on the national interest. What differs is the timeline each is willing to accept.
The enforcement test
A trade agreement is a promise. Customs houses, tax officers and exporters decide whether it becomes a gain or a loophole. That is the lesson of the inquiry now under way after the India–UK pact. Indian tax authorities are examining whether Pernod Ricard and Diageo wrongly classified bulk Scotch whisky imports to claim lower tariffs after duties were cut under the agreement. This is an investigation, not a finding, and both companies are entitled to due process. Still, it shows that tariff cuts invite classification disputes, and that India's revenue depends on officials who can spot them. Every new agreement multiplies that workload. The New Zealand pact, which opens the path to duty-free access for all products, will add to it.
What India should do
Four steps would strengthen these agreements. First, the Commerce Ministry should publish the full texts of the agreements and regular data on how much trade actually uses the preferences, so exporters and citizens can judge the results. Second, customs authorities should issue clear classification guidance for sensitive tariff lines before disputes arise, not after. Third, the relevant parliamentary standing committee should examine the US deal before ratification, and give energy-sourcing commitments specific scrutiny. Fourth, the promised New Zealand investment should be tracked publicly against its 15-year timeline. India can be a confident trading nation and a careful one at the same time. Partners should respect the first, and Indian citizens are owed the second.
A trade agreement is a promise. Customs houses, tax officers and exporters decide whether it becomes a gain or a loophole.
What this editorial rests on
Drawn from our live multi-newsroom feed — read the reporting at source.
An editorial is the considered opinion of the FarziUPSC desk, argued from the sourced reporting above and written under our published persona, बेबाक. We name institutions, not parties. If we are wrong, we will say so. How we work →