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India loses out in Thai FTA

Financial Express (India) | May 22, 2006

India loses out in Thai FTA

Imports from both Thailand & Sri Lanka zoom post-FTAs


NEW DELHI, MAY 21 : As the country debates the merits and de-merits of free trade agreements, (FTAs), an analysis of trade data shows India has been at the receiving end in both the Thai and the Sri Lanka FTAs.

During January-December 2005, Thailand’s exports of items under the Early Harvest Scheme (EHS) of the Indo-Thai FTA stood at Rs 664.3 crore - an increase of 71% over calendar year 2004. In contrast, India’s exports to Thailand actually declined 33.8% to Rs 195.6 crore.

The early harvest programme spans 82 items including auto parts, electronic goods and fruits for which tariffs were cut since September 2004.

As of December 2005, the value of FTA items in Indian imports from Thailand increased to 17.5% from 13.8% in 2004. However, FTA items in India’s export basket to that country declined from 7.7% to 5.0%, suggesting Thailand has gained much more than India from the FTA. Also, that we may not have done our homework properly while determining the items to be included in the EHS.

Overall, the balance of trade has tilted in favour of Thailand with India’s exports stagnant at 0.65% and Indian imports growing at 33.8% in 2005. Nine of the top 10 items imported from Thailand in terms of value have shown a double-digit increase in growth, the only exception being non-electrical machinery. Almost all of them have sub-categories that include items in the EHS list.

India signed the FTA with Thailand in September 2004.

At the same time, many of India’s previously high value exports to Thailand like marine products, chemicals (including drugs and pharmaceuticals) and iron & steel have shown a decline after the FTA.

The Thai FTA is not an isolated example. Trade data with Lanka reveals a similar story. While India’s exports doubled to Rs 6,082 crore between 2002 and 2005, India’s imports of Sri Lankan goods quintupled to Rs 1,636 crore in the same period.

India signed the FTA with Sri Lanka in 1999. It is currently negotiating FTAs with Asean and Bimstec.

 source: Financial Express