New Delhi: India will allow tax free import of over 4,500 items from neighbouring Bangladesh, Nepal, Maldives and Bhutan from January 2008 and later from Afghanistan to facilitate trade in South Asia, Minister of State for Commerce, Jairam Ramesh said on 21 November.
“Under the South Asian Free Trade Agreement (Safta), 4,536 items, excluding agriculture and textile ones, would be imported without duty from Bangladesh, Nepal, Maldives, Bhutan and Afghanistan from January next year,” he said at a Ficci seminar here.
Once Afghanistan joins Safta by February next year, India would extend tax exemptions to it as well. Afghanistan’s economic engagement with India would get a boost when the protocol to make it the eighth member of Safta is finalized, he said.
India would also review 744 items in sensitive list of export, comprising mainly agriculture and textiles products, he said.
“We are currently working on a review of the negative list, particularly with regard to the five least developed countries in the South Asian region,” said.
India and Afghanistan also have a Preferential Trade Agreement (PTA) under which 38 Afghan products get preferential treatment in India against eight Indian items.
India also seeks to expand the scope of the PTA by enlarging the list, Ramesh said.
Under the PTA, there has to be a minimum 50% value addition for export within South Asian. Once Afghanistan is included in Safta, this would come down to 30%.
“This would mark a significant step forward for the Afghan economy and help boost its export to India,” Ramesh said.
Urging Indian companies to increase investments for development of the Afghan economy, Ramesh said the track record of Indian investment in the least developed countries of the region is not positive.
“As against the total FDI of $400 million into Afghanistan in 2006-07, India’s share was a mere a $10 million,” he said.
Indo-Afghan trade stood at $216 million in 2006-07 and the two sides hope to take it to $1 billion in the next five years.