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1. Free trade pacts: India to move away from ‘zero-duty’ model


India will move away from a ‘zero-duty’ model in future free trade agreements (FTAs) it negotiates as it is not very comfortable with arrangements where tariffs have to be eliminated.

“We are doing some restructuring on how we negotiate. Territorial Joint Secretaries have been asked to examine how to fast-track potential trade agreements in a manner that India is comfortable with. We are not very comfortable with zero and this is a clear signal we are giving to our trade partners,” a Commerce Ministry official told BusinessLine.

India is examining possible FTAs with a host of countries, including Russia, Canada, Peru, Chile, Iran, New Zealand, Australia and the European Union. “The idea is to either not move to zero duties on any item in such pacts or keep such items to the bare minimum,” the official said. Where it is a legacy of the past and commitments have been made, it would not be possible to backtrack, the official said.

“We have already agreed to zero duties for a substantial number of items in our FTAs with Japan and Korea and the Asean. In the Regional Comprehensive Economic Partnership (RCEP) structure, too, the architecture is towards zero. So, those are the givens that we can’t do much about,” the official said. For both Japan and South Korea, tariffs have to be eliminated by India on about 70 per cent of tariff lines over 10 years of implementation. In the RCEP being negotiated, New Delhi has agreed to eliminate duties on more than 40 per cent of items with China — the country Indian industry is most apprehensive about. The Prime Minister’s Office and the Finance Ministry, too, support the strategy of moving away from zero duties. “The overall thinking in the government is that the FTAs should be structured such that the Indian industry and farmers should not have major issues with it,” the official added.

Low utilisation

Interestingly, despite India signing a large number of FTAs with individual countries and groups, industry is yet to utilise them properly. A study carried out by the Commerce Ministry earlier this year showed that Indian exporters preferred the normal route for exports to FTA partner countries, paying higher duties, rather than using the FTA route and paying lower duties as they found procedures difficult to comprehend.

According to estimates, the utilisation rate of India’s FTAs varies between 5 per cent and 25 per cent — which is one of the lowest in Asia


2. India, EU to meet in January to take stock of FTA talks


DECEMBER 11, 2015

India will hold consultations with the European Union (EU) in January, 2016 to discuss the future of the proposed free trade agreement (FTA), Commerce Secretary Rita Teaotia said on recently.

The meeting, which will take place after a gap of 30 months, will not be a negotiation but a continuation of talks that had been deferred after the EU banned the sale of around 700 pharmaceutical products, clinically tested by Indian company GVK Biosciences, on grounds of being unsafe.

Launched in June 2007, the negotiations for the proposed Broad-based Trade and Investment Agreement (BTIA), also known as FTA, have witnessed many hurdles with both sides expressing differences on crucial issues.

Chief negotiators on both sides were scheduled to meet in August, but India had cancelled talks after the impasse over the ban on pharma products could not be broken.

The January meeting is set to determine the future of the FTA as the issue has dragged on for far more time than both sides had hoped.

“We are going to meet in January to do a stocktaking and see if this negotiation has a future”, Teaotia said. In May 2013, India and the EU failed to bridge substantial gaps on crucial issues, including data security status for the information technology sector.

The recent thaw in India-EU relations reportedly started after German Chancellor Angela Merkel’s visit to India in October. Maintaining that India perceived the GVK incident as an “extremely disproportionate reaction to the perceived infringement”, Teotia said the government was disappointed and sought a transparent, open and fair position on the issue.


3. Peru eyes Free Trade agreement with India


NOVEMBER 30, 2015

Hoping to increase bilateral trade with India, South American nation Peru is looking to sign a Free Trade Agreement (FTA) with India in the next three to four years, a successful achievement of which will make it the first Latin American country to have an FTA with India.

Peru`s Ambassador to India Jose JG Betancourt said on Monday: "The FTA will just not be for goods and services, it will be a comprehensive one that will have a holistic impact with even movement of people eased."

He added that Peru will also support the global solar alliance being launched by India and France. In his first official visit to any state in the country, Jose, who only took charge two months ago, said: "...And in this regard (improvement of trade and relations) I told the external affairs ministry that Karnataka has to be the first state I visit officially. The state not only has a great history and culture but has also move along at a swift pace in the fields of science and technology and other businesses."

Anne Maeda from the Embassy of Peru in-charge of Economic and Commercial affairs added that the country is looking at getting more Indians to invite in Peru, especially in the mining sector, while Vikram Vishwanath, the Honourary Consul in Bengaluru said they have already met people from the Kudhremukh and Hatti Gold Mines.

Jose said that he also met with home minister G Parameshwar and is going to meet industry bodies and other government officials on recently.

Anne reiterated that the FTA will be crucial and will focus on trade, investment, mining, energy besides IT and pharma sectors. Peruvian media had reported last month that the FTA is being pushed for aiming to to increase the bilateral from $1.5 billion to$2 billion.


4. 3 ASEAN nations to ratify FTA with India on services soon

ASEAN member nations Indonesia, Philippines and Cambodia are likely to ratify the long-pending FTA on services and investment with India by next month that will pave way for its full implementation by the 10-nation bloc, considered one of the world`s fastest growing regions.

Many Association of Southeast Asian Nations (ASEAN) member countries including Singapore have been impressing upon the three nations to ratify the agreement at the earliest and India has been conveyed that the process will be completed by December, government sources said.

The free trade agreement (FTA) in services and investments came into force from July in countries which have ratified it.

Besides the three countries, other members of ASEAN are Brunei, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam. Laos has ratified the services part of the pact but it is yet to clear the investment component.

ASEAN is India`s fourth largest trading partner and India in turn is sixth largest trading partner for the bloc. The combined GDP of both sides is USD 2.57 trillion. Both India and ASEAN have been seeking greater economic engagement and set a target of USD 100 billion in trade by 2015.

"We are confident that Indonesia, Philippines and Cambodia will ratify the pact by December. Laos is yet to implement the investment part of the pact and we are hopeful it will be done soon," said a senior External Affairs Ministry official handling issues relating to ASEAN.

Full implementation of the FTA on Services and Investment is likely to scale up economic engagement between the two sides significantly.

India had signed a FTA in goods with the ASEAN in 2009. New Delhi was keen on the services deal as it did not gain much from the pact on goods due to already lower tariffs in the region.

India is also part of the RCEP which is negotiating a mega FTA.


The 16-member RCEP comprises 10 ASEAN members and its six FTA partners namely India, China, Japan, Korea, Australia and New Zealand. The 16 economies account for over a quarter of the world economy.


The mega pact, expected to be finalised by 2016, will open door for Indian business in the RCEP countries having combined GDP of USD 17 trillion.


5. Modi’s Moscow visit likely to propel free trade agreement talks

DECember 4, 2015

India and Russia are likely to announce commencement of formal negotiations on a free trade agreement (FTA) when Prime Minister Narendra Modi meets Russian President Vladimir Putin in Moscow later this month — a step that could strengthen bilateral trade ties that have languished over the past two decades. A joint study group (JSG), set up earlier this year to examine the feasibility of an FTA between India and the Eurasian Economic Union (EEU) — comprising Russia, Belarus, Armenia, Kyrgyzstan, and Kazakhstan — has been asked to expedite its work and submit its report before the Prime Minister’s visit so that appropriate announcements can be made during the tour, a Commerce Ministry official toldBusinessLine.

“Although the Indians and Russians are separately preparing their inputs for the JSG report, there are indications that both sides would favour an FTA provided some vulnerable sectors are taken care of. The inputs would be combined in a single document and presented to the leaders,” the official said. Modi will visit Moscow on December 24-25 for the 16th India-Russian annual summit talks with President Vladimir Putin. Established in January this year, the EEU offers India access to a huge market with a population of over 180 million with a joint GDP of an estimated $2.7 trillion.

“With India’s traditional markets such as the US, the EU and Japan facing continued economic uncertainty, it is vital for India to explore alternative markets. The EEU offers a wonderful opportunity for the country’s exporters and investors to diversify, and we are trying to grab it,” the official said. Since India’s exports to the EEU countries is less than $3 billion annually — with over $2 billion exported to Russia alone — and is just a small fraction of the region’s total imports, there is a huge potential of growth.

According to exporters’ body FIEO, India stands to gain substantially in areas such as pharmaceuticals, agriculture products, fertilisers, leather, and oil and gas if an FTA, formally called a comprehensive economic cooperation agreement, is signed with the EEU.

“As the EEU aims to set up a common pharmaceuticals zone, India’s generic exporters could have easy access to the entire region,” the official said. With Russia continuing its ban against European Union farm imports, Indian exporters stand a chance to increase their shipments of dairy and meat items. India’s relation with other members of the bloc is also reasonably smooth, the official added. ONGC Videsh Ltd has been invited by Kazakhstan to explore its Abai bloc for energy resources, while India has also signed a deal with Belarus to supply 500 tonnes of potash fertiliser.


6. Indo-Australia FTA on Track to be Sealed by Year End: Minister


November 16, 2015

The Indo-Australia free trade agreement is on track to be sealed by the end of the year but "issues" in India could impact plans for realising the deal, Trade Minister Andrew Robb has said.

The minister`s latest remark came at a time when Prime Minister Narendra Modi is set to meet his Australian counterpart Malcolm Turnbull and discuss the trade pact on the sidelines of the G20 summit in Turkey today.

The trade pact is likely to dominate talks between both the leaders who last night announced the completion of all the formalities for India-Australia Civil Nuclear Agreement. Robb, buoyed by the reassurances he has received during his visits to India throughout the year, said Australia was on track to finalise the Free Trade Agreement by year end.

"We have got a programme which will see us complete it... and with India in particular they have lots of other issues that can interfere with our programme. But at the moment we are still on track to complete a Free Trade Agreement by the end of the year," Robb said as he did not elaborate what issues he was referring to.

According to Australian Associated Press news agency, Robb said that Modi was keen to access Australian expertise to help India realise its full potential. "He (Modi) said to me at the outset... what he wants from

Australia is access to our expertise to help India realise its full potential," Robb said in Manila last night. The minister said Australia would benefit greatly from a pact with one of its fastest growing markets for goods and services. However issues in India could impact on Australia`s plans on realising the deal.

Robb hoped that both the leaders emerge from the meeting with a confirmation of the intent to sign the deal. He made his fourth visit to India in October this year in a bid to finalise the bilateral Free Trade Agreement. He had said that the two sides had made some good progress in recent months in advancing mutual aim of concluding Comprehensive Economic Cooperation Agreement negotiations.




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