Here comes the posterboy of FTAs

India-Britain FTA, concluded earlier this week, had a lot riding on it for both countries. Britain has stitched up its most significant trade deal after Brexit, while India has signed its broadest agreement with a developed economy that can serve as a template in ongoing negotiations with the US and the EU. The pact falls short of an even more comprehensive trade and investment treaty over taxation and dispute resolution, but appears to have found a workaround for Britain's Carbon Border Adjustment Mechanism (CBAM). This last bit is crucial in reaching an eventual deal with the EU. Indian sensitivities on protecting its farm output and enhancing social security for its migrant white-collar workforce will likewise influence its talks with the US.

By swift action in bilateral agreements, India is signalling a way out of the rigidities that have set in world trade due to the rise of regional trade blocs. This provides it with an opportunity to emerge from China's shadow in manufacturing exports. The FTA is timed just right when the US and China are trying to decouple their economies at an excessive cost to the world economy. If, as is widely anticipated, the US works out a way, later this year, to rebalance its trade with India, a less belligerent approach would be available to avert global trade fragmentation.

India's appeal in bilateral trade is the strength of its consumption-led growth, unique currently among major economies. The economy does not need to restructure away from export-led growth, which is a consideration that makes trade negotiation knotty for its Asian peers. India is pushing its demographic advantage to forge a globalising course in a deglobalising world.