Financial Express | Wednesday, January 16, 2008
No talks on FTA with China this year, says Nath
Indicating that a free trade agreement (FTA) with China is a long way off, commerce and industry minister Kamal Nath said on Wednesday that New Delhi and Beijing would not have any discussions on such a pact during 2008.
“We are not expecting any negotiations (on the proposed India-China FTA) this year. The Prime Minister of India and China have decided to refer the joint task force (JTF) report on the proposed FTA, to the commerce ministers of both the countries,” Nath said here on the sidelines of the CII Partnership Summit 2008.
The minister added that the joint economic group, chaired by him and his counterpart in China, would examine the report. “In the meantime, we would consult the industry before taking any decision,” he said.
India Inc fears that such an FTA, resulting in duty cuts and opening of the domestic market, would lead to massive import of cheap goods from China. Official sources said any major movement on talks on such an FTA is at least two years away.
The JTF, which was constituted to study the feasibility of and the benefits that may derive from a possible China-India Regional Trade Agreement, had submitted its report during Prime Minister Manmohan Singh’s recent visit to China.
It was agreed during the visit of the Chinese President in November 2006 that India and China would endeavour to raise the volume of bilateral trade to $ 40 billion by 2010. This target has been revised to $60 billion now. Currently the bilateral trade stands at over $38.6 billion, and is expected to cross $40 billion by this fiscal end.
The bilateral trade was just $5 billion in 2002. Though the balance of trade was in India’s favour till 2004, it is now heavily in China’s favour. India had a trade surplus of $400 million with China three years ago. But by this fiscal end, India would, instead, have a trade deficit of a whopping $12 billion.
India’s imports from China have increased by over eight and a half times since 2001-02 whereas India’s imports from the world increased by three and a half times only between 2001-07, a FICCI study said.
This has increased China’s share in India’s imports from around 4% in 2001-02 to 9.4% in 2006-07. Whereas India’s share in Chinese world imports continues to be insignificant at 1.3%, FICCI said. While China is India’s largest trade partner, India is just one of the top 10 trade partners.