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FTA with Gulf council on the backburner as talks put off

Financial Express | Nov 26, 2009

FTA with Gulf council on the backburner as talks put off

Huma Siddiqui

New Delhi — In a significant setback to India’s ties with the Gulf Cooperation Council (GCC), the Free Trade Agreement (FTA) discussions between the two sides have been postponed indefinitely.

The FTA talks were earlier scheduled to take place during minister of commerce & industry Anand Sharma’s visit to Oman at the end of this year or early next year for the Indo-Oman joint commission meeting. It has now been re-scheduled for February 1.

However, a source on conditions of anonymity told FE the dates will clash again as the commerce minister will be leading a high-level delegation to Hungary at that time. The talks have been pushed back thrice so far. “The India-GCC FTA has been a non-starter. Negotiations have stalled several times, and there is no convergence of views, especially in a few sectors, including polypropylene products and labour related issues. The UAE as well as Saudi government is not ready to include polypropylene in the negative list,” a source said. “Two countries from the GCC-Saudi Arabia and UAE-opposed Indian demands, and that caused the talks to fail.”

India has been seeking investments from the Gulf in the infrastructure sector, including ports, roads and other brown projects, said officials.

“If the FTA could be formalised between the two sides, both would benefit as it would remove restrictive duties and push down the tariffs on goods traded between the two sides,” officials pointed out.

Senior MEA officials said that even though both the sides had decided to finalise the FTA by early 2007, several rounds of meeting that have taken place so far merely reviewed the issues that need to be addressed by India and the member countries.

According to Shashi Tharoor, the minister of state for external affairs, “The India-GCC FTA is no exception. We have already completed two rounds of discussion on this FTA and expect further movement. The fact that discussions on this subject are underway points to the fact that this is not a far-off dream. Also, the GCC, as a body, is evolving. They are dealing with several issues among their members, including currency, taxation etc. In view of this, we may expect the discussions to evolve further.”

Besides Oman, GCC comprises of UAE, Saudi Arabia, Kuwait, Qatar and Bahrain. Of the three components of FTA, broad understandings on investments and services sector have been reached with Oman. Oman wants time to examine duty concessions on trade of goods between the two nations.

The FTA is expected to remove restrictive duties, push down tariffs on goods and pave way for more intensive economic engagement between the nations. The GCC is India’s second largest trading partner and the largest single origin of imports into India and the second largest destination for exports from the country as well. According to the ambassador of the Kingdom of Saudi Arabia, Faisal H Trad, “Arab-Indian trade stands at nearly 20% of the total volume of India’s trade exchange with other countries. The GCC states account for about 16% of the total trade.”

The GCC is also entering into bilateral trade agreements with China, EU, Pakistan and Australia.

 source: Financial Express