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Free trade pacts hurting, not helping India: FIEO news

Domain B | 15 December 2012

Free trade pacts hurting, not helping India: FIEO news

Disappointed with India’s exports growth for the month of November, the Federation of Indian Export Organisations (FIEO) on Friday said that the government needs to revisit its export strategy as some recent free trade agreements (FTAs) are encouraging imports rather than exports.

"The comprehensive economic cooperation agreements (CECA) or comprehensive economic partnership agreements (CEPA) or free trade agreements (FTA) have facilitated more imports than exports from India," FIEO president M Rafeeque Ahmed told a press conference in New Delhi.

Ahmed said, "The recent export figure points to revisiting our strategy for exploiting the markets with which we have signed FTA, CECA or CEPA."

He said, one of the reasons for lacklustre performance of Indian exports is slow penetration in the markets where India has signed CECA / CEPA or FTA in last few years.

"The idea of signing the FTAs was to increase exports, but we have not seen the benefits. We should not just sign and leave it ... we will release the potential areas that exporters can tap, something that the government should have done," Ahmed said.

India’s exports to ASEAN went down to $14.66 billion in first six months of the financial year as compared to exports of $36.74 billion achieved in 2011-12. A further disaggregation of exports shows that exports to Singapore, Japan, Korea, Malaysia and Thailand in April-September was much less than the pro-rata exports in the corresponding period in 2011.

The FIEO chief said that this points to a need to revisit the export strategy. He urged the government, "To start with, all such countries / regions should be put under the ’focus market scheme’, or if not, then under the ’special focus market scheme’."

He said, "A planned market development scheme with sizable corpus should be formed to support export marketing efforts in these regions as initial development of markets would require constant interaction with buyers through visits, B2B meets and exhibitions."

"Focused research on sound commercial intelligence should be conducted by the government so as to provide initial inputs to the industry for exploiting these markets," he said.

Ahmed also said the government must advise banks to provide adequate credit to exporters.

"Whenever there is a decline in exports banks ask their credit departments to go slow on credit. Just like the agriculture sector, banks also need fixed credit schemes for exporters," he added.

According to a Times of India report, even officials in the commerce department who are responsible for negotiating the trade agreements have long complained of the benefits actually accruing to India’s trading partners rather than to India.

They said that countries such as Japan and ASEAN members have low average tariffs, and any further reduction in duties cannot be significant. In contrast, India agrees to substantially lower its duties - and even remove them for thousands of items - in return for more service sector gains, which usually does not happen.

They point to the experience with ASEAN, where a services treaty is yet to be negotiated, prompting New Delhi to now sign separate agreements with member nations such as Malaysia, Thailand and Indonesia to realise some of the gains that were expected to flow to Indian nurses, doctors, accountants and IT companies.

 source: Domain B