India and Thailand announced that they would work to conclude negotiations for a free trade agreement (FTA) by June. To this end, a meeting of the trade negotiating committee to resolve outstanding issues would be held next month.
“We are looking at the end of June,” commerce and industry minister Kamal Nath said, after meeting his Thai counterpart, Krikkrai Jirapaet, when asked for a likely time frame for the signing of the agreement.
Both countries had signed a framework agreement in 2003. They have since then implemented an early harvest scheme, under which imports of 82 items have been made duty free in phases from 2004 to September 2006.
Commerce ministry officials said that Thailand has now sought deeper tariff cuts on natural rubber, an item that India has put onto its negative list. Items included in this list are kept outside the purview of tariff reductions. “We have pointed out to them that other Asean member countries such as Indonesia, Vietnam and Malaysia had also made a similar demand under the proposed India-Asean FTA which India did not agree to. Hence, it may not be possible for us to make this concession to Thailand,” one official, who did not wish to be identified, said.
India imports around 5% of its natural rubber requirements, of which, around 40% is sourced from Thailand. Thailand exports 87% of its annual rubber production.
Officials said that Thailand also asked India to include more items for tariff reduction since the present list offered duty cuts on just 50% of the country’s imports from Thailand. This compares poorly with Thailand’s list, which offers duty cuts on 75% of India’s exports.
“The Thai delegation also pointed out that under Asean, India had offered to cover 80% of the tariff lines for duty reduction. Their concern here is genuine and we will try and see what more items we can offer Thailand,” the official said.
India has offered a negative list of 489 items to Thailand, the same as submitted to Asean, on which there will be no duty cuts.
In addition to this, it has offered a sensitive list of 709 items in the sensitive list, duties on which will be brought down to 5% in a phased manner. “We are willing to prune the sensitive list by 160 items, which will then be included in the normal track for duty reduction up to zero,” the official said.
In addition to these lists India will maintain a highly sensitive list comprising items like tea, pepper, coffee and palm oil. The duties on tea, pepper and coffee would be reduced to 50% and on palm oil to 60% in a phased manner.
India, on its part, has asked Thailand to reduce duties on import of meat. It also sought lowering of telecom rates for calling India, which are extremely high.
Trade between the two countries rose by more than 20% annually over the past four years and is expected to touch $4 billion this year, G.K. Pillai, commerce secretary, said.
Two-way trade between the two countries stood at $2.2 billion (Rs9,460 crore) in 2005-06 (comprising $1 billion worth of India’s exports to Thailand and India’s imports from Thailand valued at $1.2 billion).