The Hindu Business Line : Indo-Asean FTA: Longer timeframe for exchange of duty concessions

Even as the Indo-Asean free trade agreement (FTA) negotiations are likely to be completed by June 2006 with a view to implementing the FTA from January 1 next year, the sensitivity of domestic industry would be kept in view by a longer timeframe for exchange of duty concessions, said the Commerce Secretary, Mr S. N. Menon. He was addressing the wrap-up session of domestic stakeholder consultation for finalisation of the negative list, organised by the UN Conference on Trade and Development (Unctad), here.

Handicaps

Mr Menon said that the domestic industry faces some handicaps as compared to the Asean (Association of South East Nations) countries. Considering these handicaps, he said the offer list for Asean has been divided into four categories — Normal Track 1, where the tariffs would be eliminated by 2011, Normal Track 2 where the tariffs would be brought down to 5 per cent by 2011 and eliminated by 2013, Sensitive Track 1 where the tariffs would be brought down to 5 per by 2013 and eliminated by 2018. The fourth category is the Sensitive track 2 where there would be no reduction or elimination of tariffs.

Asean, he said, was one of the fastest growing markets for Indian exports, and extra Asean imports exceeded $355 billion.

"India's share in Asean's global imports is less than even 1 per cent of their total imports. The possibilities are unlimited", Mr Menon added.

Study planned

The Commerce Ministry had requested Unctad under the Project "Strategies and Preparedness for Trade and Globalisation in India" to conduct a study to identify the items that are sensitive for India in the Indo-Asean FTA.

Following this, Unctad conducted a series of consultations with stakeholders in Ludhiana, Ahmedabad, Hyderabad, Cochin, Mumbai, Pune and Kolkata during Jan-Feb 2006.

Unctad Project Coordinator Dr Veena Jha said that the national consultation has sought to confirm from stakeholders items that have been identified as sensitive in agriculture (mainly spices, vegetable oils, plantation crops, horticulture and marine products) and select manufacturing sectors (chemicals, textiles, electronics, machinery, footwear, automotive components and motor vehicles). She said a tentative list of 583 tariff lines has been drawn where the sensitivity of the product to import competition is very vulnerable.

Vulnerable sector

It was pointed out that spices, plantation crops, oilseeds and vegetable oils appear to be the vulnerable sector sin agriculture. In the case of rice, Vietnam and Thailand seem more competitive than India. Hence international volatility in prices of spices and plantation corps needed to be factored by India while negotiating the FTA.