India eyeing trade out of Africa

After Thailand and the Asean, the government is now focusing on Africa. India and member countries of the South African Customs Union (SACU) "" South Africa, Namibia, Botswana, Lesotho and Swaziland -- are slated to sign a framework agreement for a preferential trade agreement by December.

Senior government officials told the Business Standard that the framework agreement will initially only cover trade in goods. In the first phase the two sides will provide concessional tariff on a selected list of products.

The PTA would conclude by end 2005 after which the two sides will begin work on a Free Trade Agreement which will cover services.

The framework agreement was initially scheduled to have been concluded in December last year but was delayed since the SACU charter was revised and the member countries wanted time to realign themselves to the changed charter, an official said.

Officials said that the Commerce Ministry had already begun the process of holding inter-ministerial consultations to identify products which were to be kept in the negative list and also finalise a second list of products on which India would seek preferential tariff from SACU members.

The ministry has also initiated efforts to harmonise the standards between the two sides since it is felt that tariff concessions alone may not prove sufficient to push up trade.

Officials said that there were several instances of existing trade agreements where non-harmonisation of standards were coming in way of increasing exports.

"Under the South Asia Preferential Trade Agreement (SAPTA) India has given zero duty benefit to a number of tariff lines to member countries. But cement exports for instance from Bangladesh find it difficult to enter the Indian market since the product has to be certified by the Bureau of Indian Standards," an official said.

Both India and SACU members have begun parallel efforts to harmonise their standards.

"The officials from the Bureau of Indian Standards as also the Prevention of Food Adulteration are meeting with their counterparts in SACU to harmonise standards," an official said. India's trade with SACU member countries is very marginal.

Its main trading partner in the block is South Africa. India's exports to the country in 2003-04 were valued at $0.5 billion while South Africa's exports to India (including gold) was pegged at around $ 1.5 billion.