Why this matters now
Economic diplomacy, FTAs and the RCEP/WTO debates are tested across IR and economy — increasingly central as India targets a larger role in global value chains.
What economic diplomacy is
Economic diplomacy uses trade, investment, development aid, energy and connectivity to advance national interests. Its tools include trade agreements, lines of credit, sanctions, and promoting exports/FDI and the diaspora.
Trade agreements
Free Trade Agreements (FTAs) / CEPAs / CECAs reduce tariffs and barriers between partners. India has signed recent deals such as the India-UAE CEPA and India-Australia ECTA, and is negotiating others (with the EU, UK and more). India opted out of RCEP (2019) over concerns about trade deficits and Chinese imports, preferring bilateral/sectoral deals.
WTO and the way forward
At the WTO, India defends food security (public stockholding), special & differential treatment for developing countries, and policy space, while the multilateral trading system faces gridlock. The way forward blends strategic FTAs, export competitiveness, and protecting sensitive sectors (agriculture, MSMEs).
UPSC angle
Know economic diplomacy tools, FTAs/CEPAs (India-UAE CEPA, India-Australia ECTA), the RCEP opt-out rationale (deficit/China), and India’s WTO stance (food security, S&DT).
Frequently asked questions
What is economic diplomacy?
The use of trade, investment, aid, energy and connectivity as tools to advance national interests.
What is a CEPA/FTA?
A Comprehensive Economic Partnership Agreement / Free Trade Agreement that reduces tariffs and trade barriers between partner countries.
Why did India opt out of RCEP?
Over concerns about widening trade deficits, a surge of Chinese imports and inadequate safeguards for its industry and farmers.
What does India defend at the WTO?
Food security (public stockholding), special and differential treatment for developing countries, and policy space.