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New Delhi. India has given a new direction to its strategy in the global trade arena in the last few years. Since 2021, the country has signed important trade agreements with several countries and economic groups, including the United Arab Emirates (UAE), Australia, the European Union (EU) and the United Kingdom (UK). The main goals of these agreements are to promote Indian exports, attract foreign investment and provide easy access to the international market to domestic industries.

Often the different names of these agreements like FTA, CEPA, ECTA and TEPA create confusion among people. Although all of these are concerned with facilitating trade, their objectives and scope vary significantly. Let us understand what these agreements actually mean and how different they are from each other.

FTA and CEPA: the most common agreements

Free Trade Agreement (FTA): This is the most basic trade agreement. Its main objective is to reduce or completely eliminate the taxes (tariffs) imposed on goods imported and exported between two or more countries. This makes trade between the two countries cheaper and easier, which directly benefits exporters and consumers.

Comprehensive Economic Partnership Agreement (CEPA): This agreement is much broader than FTA. In this, the focus is not only on trade in goods, but also on services, investment, intellectual property rights and other areas of economic cooperation. Under CEPA, companies can easily invest and provide their services in another country.

Special objectives of ECTA, CETA and TEPA

Economic Cooperation and Trade Agreement (ECTA): This is often a preliminary or interim agreement. When two countries want to reap trade benefits as quickly as possible, they sign ECTA first. It covers some limited goods and services. It is later negotiated into a full CEPA or FTA, as in the case of India and Australia.

Comprehensive Economic and Trade Agreement (CETA): It is a very large and detailed agreement, usually made between large economies or economic groups. It covers many complex topics like trade, investment, tariffs as well as technology transfer, government procurement and industrial standards.

Trade and Economic Partnership Agreement (TEPA): The main focus of this agreement is more on investment and economic partnership than trade. Through TEPA, emphasis is given on foreign investment in the country, setting up new industries, employment generation and increasing technical cooperation. Its goal is to strengthen the economy in the long term.

Understand the difference between all the agreements at a glance

FTA: Mainly reducing taxes on goods.

CEPA: Comprehensive economic partnership including goods, services, investment.

ECTA: Initial agreement of limited scope.

CETA: A very comprehensive agreement between major economies.

TEPA: Emphasis on investment and technical cooperation more than trade.

Major trade agreements recently signed by India

The Government of India has signed many important agreements in the last few years to increase its penetration in the global market.

Mauritius (2021): India signed its first CECPA (Comprehensive Economic Cooperation and Partnership Agreement) with a country in Africa.

United Arab Emirates-UAE (2022): A historic CEPA was signed, giving Indian exporters greater access to the Gulf market.

Australia (2022): ECTA came into force between India and Australia, which is planned to be converted into CEPA in future.

EFTA countries (2024-25): India signed TEPA with EFTA, the grouping of Switzerland, Iceland, Norway and Liechtenstein, which aims to attract investments worth $100 billion.

Other major agreements: India’s negotiations on CETA with the UK, CEPA with Oman, New Zealand and FTA with the EU are in the final stages, which are expected to be implemented soon. These steps are likely to give new strength to the Indian economy on the global stage.