India, Chile discuss zero-tax on 300 items

Chile and India are working on a partial trade agreement that will abolish tariff on 300 items.

H E Jorge Heine, ambassador Republic of Chile, said the move was expected to increase bilateral trade which was performing way below the potential.

"Tariff on many products, mainly on Indian side, is fairly high. The agreement, if it comes through, will provide better market access for products from both countries and increase trade volume significantly," he said.

While addressing an interactive session with Merchants' Chamber of Commerce (MCC) here in Kolkata on Wednesday, the Chilean ambassador said the freight element was very high as the volume was low.

"It is a chicken and egg situation. Once the volume picks up, the logistic cost will go down," he said.

So far there was no direct shipping link between two countries. The average transit time from India to Chile via Singapore or Hong Kong is 40 days. A direct link via South Africa may bring it down to 25 days.

Moreover, there is no direct air linkage between two countries and the ambassador said there was no such plan in the near future.

Trade between India and Chile has tripled in last five years. In 2003, two way trade was close to $ 300 million.

It is expected to go up to $ 350 million by 2004. Heine mentioned the contribution of service sector in the trade would also be significant as the Chilean companies were looking at IT outsourcing from India.

The ambassador rolled out red carpet for Indian investment saying it would act as a gateway for companies here to tap markets of developed countries.

"We have free trade agreement (FTA) with United States and European Unions (EU). This gives a great opportunity for companies working out of Chile to enter two biggest markets in the world," he informed.

The areas where Chile likes to step up import are textile, fabric, automobiles, pharmaceuticals and tea. Number of Indian auto makers were already present in Chile, Heine informed.

On the other hand, the export to India from Chile is overwhelmingly dominated by copper which accounts for 90 per cent of total export.