FTAs benefiting exports too; clarifies Anand Sharma

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Saurabh Gupta | 07 Nov, 2013
Commerce and industry minister Anand Sharma has denied that some recent Free Trade Agreements (FTAs) signed by India are encouraging imports rather than exports and classified that that India's exports benefited from the recent FTAs.

"With ASEAN, exports have more than doubled after signing of the Indo-ASEAN Trade in Goods Agreement in 2009, though imports have also grown as is natural in any trade agreement," Sharma said at a meeting of the Trade & Economic Relations Committee (TERC) held in New Delhi on Monday. The meeting was chaired by Prime Minister Manmohan Singh.

"Though there is significant possibility of improving our position, exports have done reasonably well in the last three months and trend is expected to continue," he added.

In his clarification Sharma said, "Most of the regional/bilateral FTAs signed by India either related to SAARC countries or to South East Asia and North East Asia. As far as SAFTA was concerned, India has huge trade surplus of about USD 12 billion."

A detailed discussions were held on India's trade engagements specifically India-EU BTIA, SAFTA, RCEP and Africa. A number of issues were discussed including impact of FTAs that have been entered into by India with its trading partners especially on India's manufacturing sectors.

Some concerns were expressed on the adverse impact of FTAs on the manufacturing sector as well as the trade balance and that imports to such countries had increased much faster compared to exports subsequent to signing such FTAs which had further worsened India's trade balance.

It was further mentioned that a significant part of India's imports from this region related to essential imports like edible oils from Malaysia and Indonesia and petroleum products and coke from Indonesia.

In case these essential imports of more than USD 16 billion are discounted, India enjoys a trade surplus with ASEAN. Even globally if we were to rationalize our imports by deducting imports of essential products like mineral oil, edible oil, coal and some other raw materials the export of manufactured raw materials was doing well.

Sharma said, "It was highlighted that there is an inbuilt mechanism of review in all FTAs which provides an opportunity for mid-course correction, if required."

A comprehensive study has been conducted by the Department of Commerce to assess the impact of FTAs in the Indian context. It was outlined that Indian exports to different regions are crucially dependent on competitiveness which is guided by other factors such as ushering in the second generation reforms on taxation, rolling out of GST, reform in labour laws, Upgradation of infrastructure relating to power, ports and roads.

"High transaction costs and cumbersome procedure on the border at times hampers the ease of doing business in India which need to be addressed simultaneously to retain India's competitiveness in global markets."

The minister has also clear his stand on Indo-China trade imbalance, he said, "With China, there is a huge trade deficit amounting to USD 38 billion which is a matter of concern. This is an issue that has been repeatedly taken up with China bilaterally at the highest level and all efforts are being made to promote exports from India like pharmaceuticals and IT services."

"Further, continuous efforts have been made within the constraint of resources provided to the Ministry to boost exports in general as well as specific sectors and markets which need assistance." Sharma added.