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Lens on trade pacts to shield industry

Sitharaman: Scrutiny time

New Delhi, July 13: The commerce and industry ministry is reviewing prospective and existing free trade agreements (FTA) amid protests by industry against the pacts.

Commerce and industry minister Nirmala Sitharaman said the government was negotiating new FTAs, including expansion and review of some of the existing ones.

At present, India is engaged in talks with a number of countries in the European Union and Asean, other than Australia, New Zealand, Israel, South Africa, Argentina and the Gulf region. New Delhi is also negotiating an FTA with the EU.

“India has been engaged at different stages of negotiations with these countries and blocs. The conclusion of negotiations depends on agreements on all the issues by the partner countries,” said Sitharaman.

She said before entering into negotiations with its trading partners, studies were conducted internally and through a joint study group to check the feasibility of the proposed FTA, including its impact on domestic stakeholders.

“In order to protect the interest of the domestic industry and agriculture sector, these agreements provide for maintaining negative lists of items on which limited or no tariff concessions are granted under the FTA,” she said.

Indian business chambers, including Ficci and CII, have been protesting against the proliferation of FTAs, which impact Indian companies. India’s FTA with Asean, for instance, has hurt the country’s consumer durables and auto spares industries.

According to Ficci, there is a need to review the trade-related measures taken by the Centre. “There is an urgent need to review existing FTAs and its impact on manufacturing. The domestic industry must be made competitive simultaneously by implementing reform agenda,” it said.

The recently released economic survey had said there was a need for a “reality check” on the large number of FTAs that were adversely impacting the domestic industry.

The survey said some FTAs had led to an inverted duty structure, with import duty on some finished goods being nil or lower than the duty on raw materials imported from other countries.

“The domestic sector involving livelihood concerns has also been affected by some of them. So a reality check of existing FTAs/regional trade agreements or comprehensive economic co-operation agreements is needed by evaluating the performance of the items for which duty concessions have been given along with the impact on domestic production,” it stated.

The Economic Survey 2013-14 said India should also ready itself to face new threats from trade pacts such as the Transatlantic Free Trade Agreement between the US and the EU, which intends to create the world’s largest free trade area, protect investment and remove unnecessary regulatory barriers.

 
 
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