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GCC-India FTA talks ‘on track’

Khaleej Times, UAE

GCC-India FTA talks ‘on track’

By Issac John, Deputy Business Editor

25 April 2008

DUBAI - Discussions on a free trade agreement (FTA) between India and the Gulf Cooperation Council (GCC) countries are expected to make a substantial progress with in a year, according to Indian Minister of Commerce and Industry Kamal Nath.

The minister, who is on a two-day visit to Dubai, said the ongoing negotiations, aimed at giving a new fillip to their thriving two-way non-oil trade, could not make progress as both sides have been extensively busy with the World Trade Organisation talks.

The minister said he could not put a time-frame for the talks to conclude, but said he was hopeful that the talks would make remarkable headway. Asked why it was taking so long to reach an agreement, the minister said similar accords normally take long years.

The two sides, seeking to boost bilateral trade, have been discussing the FTA since August 2004 when they signed a ‘Framework Agreement on Economic Cooperation’.

Last year, following visits to India by high level delegation from Gulf countries, the crucial third round of talks, which got almost deadlocked, were revived.

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 oil is extremely low in the GCC. Other issues include rules of origin and differential tariffs, while complexities arising from the absence of customs union across the six states, are also hampering efforts to finalise a deal in the past two rounds. If the FTA could be formalised, both parties stand to benefit as it would remove restrictive duties and push down the tariffs on goods being traded between them. Speedy and successful FTA negotiations would lead to a more intensive economic engagement between the two. The Muscat Declaration, issued on March 26, 2006, reiterated the the common will of the GCC countries and India to establish strategic economic cooperation in line with the rules and principles founded by the First GCC/India Industrial Conference in Mumbai in February 2004.

The minister said UAE has shown interest in investing in the $90 billion Mumbai-Delhi Industrial Corridor project Dubai. He said many UAE investors have shown interest in the mega infrastructure project “There is immense scope for investment in the faced though the Japanese government agreed to contribute project development fund (PDF).

India’s infrastructure sector requires $500 billion of investment as the country develops its roads, ports and airports infrastructure.

During his meetings with the UAE side, the minister has also raised the issue of reopening the branches of Bank of Baroda, which were closed several years ago. At present, the Bank of Baroda is the only Indian bank having full-fledged operations in the UAE, though other private and public sectors banks have representative offices in the country.

Expressing satisfaction with rising trade, the minister said the total India-UAE trade totalled $20 billion in 2006-07 which was 90 per cent more than the previous year. “The trade balance in India’s favour,” he said.