Context

In a positive development, the Union Cabinet has approved signing of the Comprehensive Economic Cooperation and Partnership Agreement (CECPA) between India and Mauritius.

Background

• India and Mauritius enjoy excellent bilateral relations, sustained by historic cultural affinities, frequent high-level political interactions, development cooperation, defence and maritime partnership, and people to people linkages.
• Mauritius is an important development partner of India.
• India had extended a ‘Special Economic Package’ of USD 353 million to Mauritius in 2016.
• The new Supreme Court building project is one of the five projects being implemented under this package and was jointly inaugurated by Prime Minister Narendra Modi and the Prime Minister of Mauritius Pravind Jugnauth in July 2020.
• In October 2019, Prime Minister Modi and the PM of Mauritius had jointly inaugurated the Phase -I of the Metro Express Project and the 100-bed state of the art ENT hospital project in Mauritius, also built under the special economic package.
• The India-Mauritius CECPA will further cement the already deep and special relations between the two countries.

SAGAR (security and growth for all) In 2015, Indian PM unveiled an ambitious policy called the SAGAR (security and growth for all). It was India’s first significant policy statement on the Indian Ocean in many decades.

Analysis

What is in the India-Mauritius CECPA?

• The India-Mauritius CECPA will be the first trade Agreement to be signed by India with a country in Africa.

India has implemented free trade pacts with countries like Japan, Korea and ASEAN (Association of South East Asian Nations). It is also negotiating similar agreements with Australia, New Zealand and European Union.

• The Agreement is a limited agreement. It will cover
  • Trade in Goods
  • Rules of Origin
  • Trade in Services
  • Technical Barriers to Trade (TBT)
  • Sanitary and Phytosanitary (SPS) measures
  • Dispute Settlement
  • Movement of Natural Persons
  • Telecom
  • Financial services
  • Customs Procedures and Cooperation in other Areas
• The CECPA between India and Mauritius covers 310 export items for India, including food stuff and beverages (80 lines), agricultural products (25 lines), textile and textile articles (27 lines), base metals and articles thereof (32 lines), electricals and electronic item (13 lines), plastics and chemicals (20 lines), wood and articles thereof (15 lines), and others.

What is Automatic Trigger Safeguard Mechanism (ATSM)?

• Both sides have also agreed to negotiate an Automatic Trigger Safeguard Mechanism (ATSM) for a limited number of highly sensitive products within two years of the Signing of the Agreement.
• It will automatically increase levies once imports cross a given threshold.
• ATSM is considered as an effective tool in balancing trade among multilateral partners. 
• It was also part of the trans-pacific partnership (TPP), negotiations before the Donald Trump Administration pulled out from it.

Assessing the trade relationship of India and Mauritius

• Since 2005, India has been among the largest trading partners of Mauritius, and has been one of the largest exporters of goods and services to Mauritius.
• According to the International Trade Centre (ITC), in 2019, the main import partners of Mauritius were India (13.85%), China (16.69%), South Africa (8.07%), and UAE (7.28%).
• The bilateral trade between India and Mauritius has registered a growth of 233% from USD 206.76 million in Financial Year (FY) 2005-06 to USD 690.02 million in FY 2019-20.
• India’s exports to Mauritius surged 232% from USD 199.43 million in FY 2005-06 to USD 662.13 million in FY 2019-20, while India’s imports from Mauritius increased 280% from USD7.33 million in 2005-06 to USD 27.89 million in FY 2019-20.

What is the importance of Mauritius for India?

• Diaspora: Communities of Indian origin constitute a significant majority in the island. 
• Power contestation in Indian Ocean: India has certainly begun to see the strategic significance of Mauritius due to the renewed great power contestation in the Indian Ocean.
  • Mauritius is all about location and the genius of its people. As early European explorers sailed around the African continent and ventured eastwards to India, they began to call Mauritius, the “Star and Key of the Indian Ocean”.
  • If the Portuguese and the Dutch were the first to gain a foothold in Mauritius, it was the French who gained effective control over the island in the early 18th century.
• A significant gateway: The Mauritius pivot can facilitate a number of Indian commercial activities in the south western Indian Ocean — as a banking gateway, the hub for flights to and from Indian cities and tourism.

How significant is this agreement?

• Improvement in trade: CECPA provides for an institutional mechanism to encourage and improve trade between the two countries.
• Preferential market access for Mauritius: Mauritius will benefit from preferential market access into India for its 615 products, including frozen fish, speciality sugar, biscuits, fresh fruits, juices, mineral water, beer, alcoholic drinks, soaps, bags, medical and surgical equipment, and apparel.
• Wide access to service sectors: As regards trade in services, Indian service providers will have access to around 115 sub-sectors from the 11 broad service sectors. On the other hand, India has offered around 95 sub-sectors from the 11 broad services sectors.

Conclusion

Mauritius is “at the heart” of India’s policy in the wider Indian Ocean Region for its strategic value. And this latest development will further strengthen India’s game in the region.