Merinews | 14 December 2007
India’s trade surplus with Singapore reduced post-FTA
India’s trade surplus with Singapore shrunk after the comprehensive economic cooperation agreement between the two countries came into force. However, one notable point is that the share of India in Singapore’s global imports has increased.
INDIA’S TRADE surplus with Singapore has shrunk after the comprehensive economic cooperation agreement (CECA) between the two countries came into force in August 2005.
A study by FICCI has said that India had a small surplus vis-à-vis Singapore in 2003-04, which swelled to over $1.3 billion in 2004-05 before the Free Trade Agreement in goods was implemented. However, in 2006-07 this surplus was narrowed to less than $600 million and this in fact has turned into a deficit of over $300 million in the first four months of current year.
This deficit is in contrast to a surplus of $600 million in the same period of last year. At this rate India might end up with a trade deficit of $1 billion for the full year of 2007-08, observed the chamber.
India-Singapore FTA in goods came under implementation in August 2005, and duties have been eliminated and reduced on a large number of products by India for imports from Singapore.
FICCI-analysis reveals that out of the top-20 imports from Singapore in 2006-07, 14 items are from the category of immediate duty elimination, which means for such products India eliminated tariffs right from the day of implementation (1 August 2005) for imports from Singapore.
Another two products from the top-20 list belong to the category of phased-elimination of import duty where tariffs will be abolished by India by the year 2009. Among India’s top-20 imports from Singapore, which figure in the immediate duty elimination list, substantial growth was witnessed in cellular phones and personal computers (including laptops). Imports of cellular phones from Singapore recorded a growth of over 300% in 2006-07, while imports of computers jumped by more than 250%.
In 2006-07, the share of Singapore in India’s total imports was close to 3%, up from 2.4% in 2004-05. Singapore’s share in India’s exports, on the other hand, has fluctuated in the two years of implementation of CECA. While in 2005-06, the share of Singapore in India’s total exports moved up to 5.3%, in 2006-07 it dropped back to the pre-CECA level of 4.8%, according to the findings of FICCI-study. However, one notable point is that the share of India in Singapore’s global imports has increased from 1.05% in 2004 (pre-CECA) to 2.04% in 2006 (post-CECA).