India-Asean differences over FTA continues

Differences between India and Asean countries continue over how much bilateral trade should be covered by a proposed free trade agreement.

While Asean wants the proposed pact to cover at least 90 per cent bilateral trade, India is pitching for a standard norm of 70 per cent.

The differences remain even as Prime Minister Manmohan Singh as asked the commerce ministry to ensure early conclusion of the negotiations.

Government officials told Business Standard that agreeing to Asean's proposal would mean that India would have to reduce tariffs on several sensitive agriculture items like palm oil, rubber, pepper, tea and coffee.

For instance, nearly 60 per cent of India's trade with Indonesia consist of palm oil imports. Similarly, a significant portion of India's imports from Malaysia comprises rubber and palm oil.

Pepper, rubber, tea and coffee account for a major share of India's trade with Vietnam. The pact covering 90 per cent of bilateral trade with each of these countries will mean that India cannot keep agriculture products on its negative list.

"We cannot agree to reduce tariffs on these items as it will severely compromise our negotiating stance at the WTO where talks are expected to reach a crucial stage later this year," an official said.