Times of India

Outreach plan to counter threat perception on FTAs

By Sidhartha, TNN

15 August 2011

NEW DELHI: In a bid to counter the fears of local industry, the government is set to launch an outreach programme aimed at sensitizing domestic players about the advantages of the free trade agreements signed by India. Government officials told TOI that the commerce & industry ministry was in the process of finalizing a nationwide programme to address the concerns.
The move comes at a time when 10 trade agreements, with several including investment and services deals, are operational. The government is in the process of negotiating 17 agreements, with several of them focusing on expanding the list to include more products or services. Ever since India signed a limited agreement with Thailand, the local industry has been complaining of losing out to cheaper imports. It pointed to the early harvest scheme with Thailand to argue that some foreign companies had stopped manufacturing some of the products and were importing them into India.

In recent years, the Asean agreement came in for special scrutiny and now the proposed bilateral pact with European Union is being opposed by local automobile manufacturers and wine manufacturers, who fear that they would lose out if tariffs are lowered. But the government is trying to tell the industry that the trade deals are a win-win solution as several local players can use the concessions to import inputs. In any case, the government has been trying to argue that these pacts help in opening new markets for Indian exporters.

Also, the commerce ministry is keen on telling domestic companies that before entering into negotiations, internal studies are undertaken to assess the feasibility of the proposed FTAs, including their impact on the domestic industry and agriculture.

Consultations are also held with the domestic stakeholders including industry chambers and trade bodies.

In any case, to protect local players, the agreements provide for maintaining sensitive and negative lists on which limited or no tariff concessions are granted under the FTA. Further, to check against a surge in imports, the government can impose anti-dumping duty or use safeguards.