Negotiating Trade Agreements with India: The Reality Below the Water Line

This briefing by the South African Institute of International Affairs (SAIIA) analyzes India's approach to international trade, arguing that its reluctance to enter binding trade agreements is rooted in a domestic political culture of self-sufficiency and a government-driven (rather than business-driven) policymaking process. The author examines how these internal dynamics and the lack of institutional capacity may result in a 'commercially shallow' free trade agreement (FTA) between India and South Africa, prioritizing political alliances over economic integration.

• India's trade policy is characterized by a deliberate effort to avoid binding international commitments, reflecting a domestic consensus that prioritizes self-sufficiency and the production of essential goods and services within the country.
• The Indian trade negotiation process is government-led and lacks business initiative; trade and business associations typically act as a 'sounding board' for government positions rather than as initiators of policy ideas.
• The Ministry of Commerce and Industry (MOCI), which handles trade negotiations, is often isolated from other government ministries and operates within a political culture that does not apply free trade principles internally.
• India's domestic institutional capacity for trade policymaking is hampered by a lack of systematic consultation with its 28 state governments, who often lack the organizational capacity to analyze the implications of trade proposals.
• India's approach to regional and bilateral agreements is driven more by the desire to create political networks and stability in an uncertain world than by economic goals, often resulting in 'shallow and insubstantial' trade relations.
• A potential free trade agreement between India and South Africa faces significant hurdles, including a very low current trade volume (just over 1% of total trade for both), a lack of Indian experience in managing deep bilateral commitments, and complexities regarding Rules of Origin.
• The author predicts that any India-South Africa trade agreement would likely be 'politically weighted'—focusing on strategic priorities like defense and minerals—while remaining commercially shallow and lacking binding reciprocal commitments.

APA

Sen, J. (2004). Negotiating Trade Agreements with India: The Reality Below the Water Line. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2010/08/Trade-Briefing-8-final24Nov.pdf

Chicago

Sen, Julius. Negotiating Trade Agreements with India: The Reality Below the Water Line. South African Institute of International Affairs, 2004. https://saiia.org.za/wp-content/uploads/2010/08/Trade-Briefing-8-final24Nov.pdf.

Wikipedia

{{cite report |last1=Sen |first1=Julius |title=Negotiating Trade Agreements with India: The Reality Below the Water Line |publisher=South African Institute of International Affairs |date=November 2004 |url=https://saiia.org.za/wp-content/uploads/2010/08/Trade-Briefing-8-final24Nov.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sen2004negotiating, author = {Sen, Julius}, title = {{Negotiating Trade Agreements with India: The Reality Below the Water Line}}, institution = {South African Institute of International Affairs}, year = {2004}, month = nov, url = {https://saiia.org.za/wp-content/uploads/2010/08/Trade-Briefing-8-final24Nov.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }