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GCC, India closer on FTA deal

Zawya | 17 September 2008

GCC, India closer on FTA deal

By M. Ghazanfar Ali Khan

RIYADH: Talks on a free trade agreement (FTA) between the six-nation Gulf Cooperation Council (GCC) and India made substantial progress here yesterday with the two sides committing to conclude the FTA as early as possible.

"The two sides, after having exchanged draft agreements, are currently studying them for an early signing," said Rajeev Shahare, deputy chief of the Indian mission, here yesterday.

Shahare said that the second round of FTA talks, held after a gap of two and a half years since March 2006, showed full commitment from both sides. The Indian side presented to the Saudi side a list of FTAs, which India has signed with other countries so far.

The GCC delegation was led by Ahmad Ahen, head of Qatari delegation. Bharathi Sihag, joint secretary at the Indian Ministry of Commerce & Industry, led the Indian side, of which Shahare was a representative.

"Both sides reviewed the earlier minutes and exchanged information related to export-import polices, tariff schedules and trade," said Shahare. He pointed out that the third round of talks will be held in New Delhi in January 2009. Shahare said, "The talks have made remarkable headway and we look for an early conclusion."

Asked why it was taking so long to reach an accord, he said that such deals normally take some time. The GCC and India, seeking to boost trade, have been discussing the FTA since Aug. 2004 when they signed a "Framework Agreement on Economic Cooperation."

A source close to the talks said India is likely to seek greater safeguards for its chemicals and petrochemical industry. This is being done with a view to protect domestic players who would find it difficult to handle competition as the cost of crude is extremely low in the GCC.

Other issues include rules of origin and differential tariffs, which are also to be discussed and finalized.

"If the FTA could be formalized, both parties stand to benefit as it would remove restrictive duties and push down the tariffs on goods being traded between them," said a report released on this occasion.

Speedy and successful FTA negotiations would lead to a more intensive economic engagement between the two blocs, said the report.

The plan for a free trade area between GCC as a bloc and India was initiated at the first GCC-India Business Conference held in Mumbai in Feb. 2004. New Delhi is an important trading partner of GCC and Indian labor in the Gulf region is a significant supporting element of the relations between both sides.

There are about six million Indian workers in the GCC states, according to unofficial statistics. The huge Gulf capital and India’s technology can join hands by developing joint ventures in high technology areas in the territories of both sides, which will be beneficial for both commercial blocs.