FTA with S'pore to be ruinous: small units

NEW DELHI: Can the proposed Free Trade Agreement (FTA) with Singapore be tantamount to an FTA with China, having disastrous consequences to the domestic manufacturing industry? Given intra-Asean complaints against Singapore for exporting products of non-domestic origin, it could well be so, feel sections of the domestic industry. “India does not gain anything out of the proposed agreement.
It’s a complete sell-off,� says the Federation of Indian Micro and Small & Medium Enterprises (FISME).The small and medium enterprises are already burdened with an inverted duty structure as regards a number of product lines. The FTA would escalate the “reverse tariff� disadvantage. With the zero duty benefit under the FTA, Chinese goods can enter the Indian markets using Singapore as transit. With the present Customs duty structure in India where many raw materials are at the highest duty slab, the FTA would ruin the domestic manufacturing sector, says Mr. Dinesh Singhal, president, FISME.
Of course, there was a great scope of cooperation with Singapore in area of services, but signing an agreement with a trading hub as Singapore for goods is like signing FTA with China, Mr Singhal points out. In a memorandum submitted to ministry of commerce, FISME has said that that trade diversion through Singapore is a major cause for concern even within the ASEAN. It is viewed as an intra-ASEAN trade distortion. Singapore’s laxity on rules of origin is legendary. Approximately 50% of Singapore’s current exports to India being re-exports, the proposed FTA could potentially augment trade diversion through Singapore, precipitating a disaster for manufacturing sector in general and SSIs in particular. Unlike India, the tariff walls in East Asia are already very low and Indian exporters do not require Singapore as conduit for entry in East Asia. FISME has said that the list itself highlights what was in store for future.