Indo-Gulf free trade plan hits a petrochem block
Economic Times (India) } 15 September 2006
Indo-Gulf free trade plan hits a petrochem block
AMITI SEN
NEW DELHI: The proposed free trade agreement (FTA) between India and the Gulf Cooperation Council (GCC) has hit a roadblock with the Indian industry, especially the petrochemical sector, opposing the agreement.
According to sources, the petrochemical sector wants items produced by it to be put on the sensitive or negative list so that it is not subjected to tariff reduction commitments under the FTA. GCC, on the other hand, is not agreeable to keep petrochemicals out of FTA.
Sources added that while certain countries in the six-member GCC like Oman are eager to reach a compromise so that the FTA could be signed next year as per schedule, others are not that keen. Though the Omanese trade minister recently talked about a fast-track mechanism to conclude the India-GCC FTA, officially the GCC has not reflected the enthusiasm.
“It is becoming very difficult to move forward our FTA negotiations with the GCC as a group,” an official said. Other members of the GCC include Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.
The Indian petrochemical industry is against the FTA as it feels that GCC countries have comparative advantage since they get fuel very cheap. The fact that production capacities in Gulf countries were likely to expand was proving to be an added threat as it would make the petrochemical industry in GCC even more competitive.
Uncertainty about the future of the agreement on goods has also put on hold negotiations on services and investment. Though India has done its homework in both the areas, negotiations on services and investments cannot proceed till the FTA in goods is clinched.GCC has emerged as India’s important trading partner with the two-way trade touching $16bn last year.
