Free trade pacts now in fashion
9 December 2006
Free trade pacts now in fashion
OUR SPECIAL CORRESPONDENT
New Delhi, Dec. 8: The Gulf nations and Japan are the next in line for free trade agreements (FTAs) with India.
Commerce minister Kamal Nath, who is currently on a visit to Dubai, held discussions with the Gulf Co-operation Council (GCC) members on the possibility of a free trade agreement. The minister expects to sign a free trade agreement with the GCC by the end of 2007.
India and Japan will also begin talks on a free trade agreement (FTA) when prime minister Manmohan Singh visits Japan next week, according to a senior official from the Japanese embassy here.
Ahead of Dr Singh’s Japan visit, business and political leaders are hopeful of significant breakthroughs in economic and political ties between the two countries. Some other possible outcomes are increasing the number of flights between India and Japan and signing more sister-province agreements.
The six-member Gulf Co-operation Council comprising Saudi Arabia, United Arab Emirates, Kuwait, Bahrain, Qatar and Oman is India’s third-largest trading partner. However, the members are not large investors in the country.
The main imports from the council is crude oil, and India would like to push up its exports to the region to correct its negative balance of trade.
This will also help the Gulf remain a trading point for India’s sales to countries like Pakistan which offer high duty barriers.
However, it will also mean cheaper goods pushed through the Gulf by other nations which will find its way into India too. This is bound to be an area of concern for domestic industry.
India is also keen on attracting investment from the Arab countries which are flush with funds from high oil prices.
Nath said India needs to spend $400 billion in the next five years on building infrastructure to keep pace with a fast-growing economy.
“There is very little investment in India’s urban infrastructure even to sustain our levels of growth now,” he said.
“I think we should easily be able to secure $2 billion additional investment in the next three years from the GCC,” he said, adding that Dubai real estate developer Emaar Properties has so far invested $600 million in its Indian projects.
