The term PTA most commonly refers to a Preferential Trade Agreement, which is a concept and scheme in international trade policy where two or more countries agree to reduce tariffs on an agreed number of products. India has actively engaged in these agreements, viewing them as pivotal to its foreign trade policy and a means to strengthen its position in the global marketplace. The core purpose of a PTA is to minimize tariffs and other trade barriers to increase trade among member nations.
The mechanism of a PTA involves granting preferential market access by lowering tariffs on a specific, agreed-upon list of products, known as the "positive list". This is a key distinction from a Free Trade Agreement (FTA), which is generally more ambitious, eliminating tariffs on items covering substantially all bilateral trade and using a "negative list" of products on which duty is not reduced. India has signed six limited coverage PTAs, such as the SAARC Preferential Trading Arrangement (SAPTA), which was signed in April 1993 and implemented in December 1995.
PTAs are part of a broader spectrum of economic integration agreements, which also include FTAs and more comprehensive pacts like Comprehensive Economic Partnership Agreements (CEPA), which integrate goods, services, and investment. India continues to strategically extend and improve its network of PTAs. For instance, the India-Chile PTA, signed in 2006, was expanded in 2016 and came into force in May 2017, demonstrating the ongoing evolution of these agreements.