If India enters into Free Trade Agreements (FTAs) with other nations, then the growth of exports of India would depend upon which of the following?
- 1Extent of tariff reduction vis-à-vis MFN tariffs
- 2Extent of relaxation in terms of rules of origin
- 3Extent of relaxation in sanitary and phytosanitary measures
- 4Level of infrastructure in India
- 5Income in nations with which India enters into FTAs
Select the correct answer using the code given below.
- A1, 2, 3, 4 and 5
- B1, 2 and 4 only
- C2, 3 and 5 only
- D1, 3 and 4 only
Explanation
India's export growth under Free Trade Agreements depends on the preference margin, so the extent of tariff reduction vis-à-vis MFN tariffs matters (1). Relaxed rules of origin let exporters actually use the preferences, so this matters too (2). Relaxation of sanitary and phytosanitary measures eases market access for agricultural and food exports (3). Domestic infrastructure determines whether exporters can compete on cost and delivery timelines (4). Export demand ultimately depends on the income and growth of the partner nations (5). Since all five factors matter, the answer is (A).