New Delhi: India is targeting a 40% jump in its trade with the Asean to $70 billion in 2012 with the signing of Free Trade Agreement (FTA) with the 10-nation trade grouping, commerce and industry minister Anand Sharma said on Wednesday.
He told the Rajya Sabha during Question Hour that India’s trade with Asean has grown to $50 billion in 2010 from $41 billion after New Delhi signed a Trade in Goods Agreement with the south east Asian block on 13 August, 2009.
“We have to take care that there is a balance... If imports have increased, India’s exports (to Asean) have also increased,” he said.
Asean consists of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The agreement that provides for both India and Asean reducing tariff on agreed goods, has come into force with all but Cambodia and Philippines.
“The agreement mainly consists of exchange of tariff concessions by India and Asean countries during 1 January, 2010 and 31 December, 2024,” he said.
Allaying fears that the FTA will harm domestic agriculture, he said majority of the agriculture items are protected by placing them in exclusion of negative list where no tariff concessions are available to Asean countries.
Items on the negative list include vegetables, fruits/nuts, spices, cereals/grains, oilseeds/oil, natural rubber and tobacco.
“The agreement also provides for a safeguard mechanism to address sudden surge in imports on account of tariff concessions,” he said. “When such a surge is likely to hurt the domestic market, safeguard measures including imposition of safeguard duties can be initiated to prevent or remedy serious injury and to facilitate adjustment for the domestic market.”
Sharma said 1,297 products including 689 agriculture goods, have been kept in the negative list.
On reduction of tariff on tea and coffee, he said the tariff on tea and coffee will be 45% each and that on pepper will be 50% in 2020, a 1.8-5% reduction from present import duties.
To a separate question, Sharma said the government plans to formulate a manufacturing policy to increase the share of manufacturing in the nation’s gross domestic product (GDP).
Share of manufacturing in India’s GDP is 16% as compared to 26 to 33% in other fast growing economies, he said.
Though there is no decline in industrial production, the share of manufacturing in GDP has remained almost stagnant at 16 per cent over last few years, he said. “Manufacturing policy will aim to increase share of manufacturing in GDP.”
Sharma said the cost of labour as percentage of the total cost of production in the organised manufacturing sector between 2004-05 and 2008-09 has been between 4.1-4.3.
Cost of labour as percentage of the total cost of production in organised manufacturing sector was 4.2% in 2004-05. It fell to 4.1% in 2006-07 and climbed to 4.3% in subsequent two years.
He said the total investment in capital intensive industries has increased from Rs1.94 trillion in 1990-91 to Rs15.35 trillion. Labour has also increased from 82.79 million in 1990-91 to 113.27 million currently.