Will good intentions suffice?

"Nearly 10 years in the making, India and Australia inked a landmark economic pact..., which will see duties slashed on more than 85% of goods exported to the South Asian nation as both governments secure alternative supply chains and counter an assertive China," ET. This is an Economic Cooperation and Trade Agreement (ECTA) and not a Free Trade Agreement (FTA) as India has with Japan and South Korea. "Currently, Indian exports face a tariff disadvantage of 4-5% in many labor-intensive sectors vis-a-vis competitors in the Australian market such as China, Thailand, Vietnam, South Korea, Japan, Indonesia and Malaysia," wrote Director General of Confederation of Indian Industry Chandrajit Banerjee. "There will be zero duty on 96.4% value of Indian exports immediately (98% of tariff lines), that is, for these items, Indian exports will have immediate market access at zero duty from day one of the deal coming into force." "All the major traditional Indian exports, such as textiles and apparel, select agriculture and marine products, leather, footware, furniture, gems and jewellery, pharma and engineering products, etc. stand to gain immediately." Problem is that Australia imported a much larger list of products from China, worth USD 72.86 billion in 2021, tradingeconomics, and India's exports will have to compete with those of China's. In February, India signed a Comprehensive Economic Partnership Agreement (CEPA) with the UAE, TIE, which contains almost the same list of products for exports. In fact, India imported USD 87.54 billion worth of goods from China in 2021, which include apparel, footwear, leather and pharmaceutical products, tradingeconomics. In 2020, India walked out of negotiations to join the Regional Comprehensive Economic Partnership (RCEP) with ASEAN countries -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam -- plus Australia, China, Korea, Japan and New Zealand. "Major issues that were unresolved during RCEP negotiations were related to the exposure India would have to China. This included India's fears that there were 'inadequate' protections against surges in imports," TIE. India's fears about import surge from China are well founded. "According to the latest figures published by China's General Administration of Customs of the People's Republic of China (GACC), exports to India reached $97.52 billion in 2021," The Print. This can only be because Chinese goods are cheaper than those produced in India, even after taxes imposed on them. Why are goods produced in India more expensive? All products are subject to goods and services tax (GST) which collected a record Rs 1.42 trillion in March, ET. Second is the extremely high cost of fuel which has been hiked by Rs 9.20 in the past two weeks, NDTV. The government has raked in windfall taxes of Rs 26 trillion in 8 years, the Congress charged in parliament, ET. Thirdly, the RBI is selling dollars against rupees to jack up the value of the rupee against the dollar, TOI, in an effort to control inflation which makes exports more expensive compared to competitors. If we can't compete with China at home how can we compete elsewhere? Still, intentions are good.