Centre to review FTAs skewed against India
The series of free trade agreements (FTAs) signed by India recently is turning into a headache for the government due to sensitivities of vulnerable sections like farmers and textile industries.
By Gaurav Malani, TNN |
NEW DELHI: The series of free trade agreements (FTAs) signed by India recently is turning into a headache for the government due to sensitivities of vulnerable sections like farmers and textile industries. A comprehensive review of all such agreements is on the cards. Deals on the drawing board would also be put under the scanner. Meanwhile, the government is likely to incorporate tariff-rated quotas (TRQs) in all FTAs to protect farmers and small industries.
The relook at FTAs follows the growing realisation that benefits accruing from such agreements are skewed against India in most cases. Top government functionaries feel that Comprehensive Economic Cooperation Agreements (CECAs) are preferable as the services element in such pacts would help India Inc.
The Asean FTA, for example, holds a high-level of asymmetry. In terms of aggregate trade potential, the benefit to Asean members and India is in the ratio of 1:4. Indonesia and the Philippines would be the major beneficiaries. It is understood that Jairam Ramesh, minister of state for commerce, has drawn the attention of the authorities concerned to the impact of the Asean FTA. The PMO and the finance ministry, apart from the commerce department, are also looking at all such pacts in view of the fallout on the economy.
The export potential for Asean members like Indonesia, Malaysia, the Philippines, Singapore and Thailand was estimated by the study at $10.2bn. In comparison, the benefit potential for India was just $2.7bn.
This asymmetry has been brought out clearly in a joint study by the Malaysian Institute of Economic Research and the Indian Institute of Foreign trade. ���The aggregate trade potential is estimated at $12.9bn. There is, however, fairly high level of asymmetry. India���s trade export potential is estimated at $2.7bn, while that of Asean-5 is at $10.2bn, which gives us a ratio of almost 1:4. Interestingly, the huge trade potential that exists for the Philippines and Indonesia is revealed. This is presumably due to the low base of export trade with India,��� says the study.
The study was based on UNCTAD methodology and it used historic data to project future gains for the two FTA partners. India has inked a CECA with Singapore and a separate FTA with Thailand. In the case of Sri Lanka, an FTA is already in place and talks are on for a CECA.
The relook at FTAs follows the growing realisation that benefits accruing from such agreements are skewed against India in most cases. Top government functionaries feel that Comprehensive Economic Cooperation Agreements (CECAs) are preferable as the services element in such pacts would help India Inc.
The Asean FTA, for example, holds a high-level of asymmetry. In terms of aggregate trade potential, the benefit to Asean members and India is in the ratio of 1:4. Indonesia and the Philippines would be the major beneficiaries. It is understood that Jairam Ramesh, minister of state for commerce, has drawn the attention of the authorities concerned to the impact of the Asean FTA. The PMO and the finance ministry, apart from the commerce department, are also looking at all such pacts in view of the fallout on the economy.
The export potential for Asean members like Indonesia, Malaysia, the Philippines, Singapore and Thailand was estimated by the study at $10.2bn. In comparison, the benefit potential for India was just $2.7bn.
This asymmetry has been brought out clearly in a joint study by the Malaysian Institute of Economic Research and the Indian Institute of Foreign trade. ���The aggregate trade potential is estimated at $12.9bn. There is, however, fairly high level of asymmetry. India���s trade export potential is estimated at $2.7bn, while that of Asean-5 is at $10.2bn, which gives us a ratio of almost 1:4. Interestingly, the huge trade potential that exists for the Philippines and Indonesia is revealed. This is presumably due to the low base of export trade with India,��� says the study.
The study was based on UNCTAD methodology and it used historic data to project future gains for the two FTA partners. India has inked a CECA with Singapore and a separate FTA with Thailand. In the case of Sri Lanka, an FTA is already in place and talks are on for a CECA.
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