Understanding Indian Trade Policy

The report argues that a trade agreement between India and SACU is likely to be 'commercially shallow' and politically motivated rather than economically driven. It traces India's shift from a protectionist 'license-permit-quota raj' (1947–1991) to a strategy of 'incremental unilateralism' post-1991, where liberalisation is driven internally rather than by external trade deals. The author notes that India and South Africa are not natural trading partners, with trade heavily skewed by gold imports, and suggests that India's desire to preserve 'policy space' will lead to a limited agreement with significant 'negative lists' and minimal concessions in sensitive areas like agriculture and investment.

• India's trade liberalisation strategy since 1991 is characterised as 'incremental unilateralism', meaning that while India supports the WTO and occasional bilateral deals, actual liberalisation is driven by internal decisions to avoid external pressure on the pace of reform.
• The proposed Indo-SACU agreement is expected to be 'commercially shallow' and lack binding reciprocal commitments, serving more as a political symbol to build South-South alliances than as a tool for significant economic gain.
• Trade between India and South Africa is not naturally robust; excluding gold, the growth in total trade between 1994 and 2002 was only 12%, compared to over 31% when gold is included.
• India is likely to resist a 'negative list' approach in goods negotiations (where all trade is free except for specific exemptions), preferring a 'positive list' approach to limit concessions, as seen in its negotiations with Singapore.
• Significant divergence exists between India and South Africa regarding the WTO, particularly on the 'Singapore Issues' (investment, government procurement, competition policy, and trade facilitation) and the movement of natural persons (Mode 4) in services.
• India's agricultural sector remains highly protected due to the livelihoods of approximately 700 million people, making it unlikely that agriculture will be a substantive part of the Indo-SACU agreement.
• India's historical economic trajectory was shaped by a reaction to colonial-era 'de-industrialisation', leading to a post-independence strategy of import substitution and a 'license-permit-quota raj' until the 1991 debt crisis.

APA

Alves, P. (2004). Understanding Indian Trade Policy. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2013/06/5-Indo-SACU-FTA-final-23-Nov04.pdf

Chicago

Alves, Philip. Understanding Indian Trade Policy. South African Institute of International Affairs, 2004. https://saiia.org.za/wp-content/uploads/2013/06/5-Indo-SACU-FTA-final-23-Nov04.pdf.

Wikipedia

{{cite report |last1=Alves |first1=Philip |title=Understanding Indian Trade Policy |publisher=South African Institute of International Affairs |date=November 2004 |url=https://saiia.org.za/wp-content/uploads/2013/06/5-Indo-SACU-FTA-final-23-Nov04.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{alves2004understanding, author = {Alves, Philip}, title = {{Understanding Indian Trade Policy}}, institution = {South African Institute of International Affairs}, year = {2004}, month = nov, url = {https://saiia.org.za/wp-content/uploads/2013/06/5-Indo-SACU-FTA-final-23-Nov04.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }