India steps on the gas for regional trade deals

With the collapse of the Doha round of WTO negotiations, India is likely to put its proposed regional trade agreements on the fast track.

New Delhi has made a revised offer to Asean to break the deadlock on talks for a free trade agreement. The agreement with South Korea has gathered steam.

Also in the pipeline are a comprehensive agreement on goods, investment and services with the European Union and a bilateral agreement with Japan.

Talks with Asean have been stuck on the issue of duty cuts on palm oil, tea and pepper. While Asean wants India to undertake steep duty cuts, New Delhi had proposed a regime under which import duty would be reduced only for a fixed quantity of imports every year.

Asean had rejected India's offer and had suggested pruning India's negative list to just 60 items against its offer of 854 items.

India last week agreed to consider a compromise formula to break the impasse. According to the formula, India's negative list would be split in two "" one with items where duties will never be cut, and the other containing sensitive items like palm oil, tea and pepper on which there would be no duty cuts for the first five years, followed by gradual cuts over the next 10 years.

The new formula is likely to be tabled at the India-Asean trade minister's meeting on August 23-24. Meanwhile India's Comprehensive Economic Cooperation and Partnership Agreement (CEPA) with South Korea is likely to be made operational by the second half of 2007. Both sides are working to conclude negotiations by then. The third round of talks for the CEPA concluded in New Delhi last week.

The contours of a comprehensive agreement with the EU are also expected to be finalised by the high level Inda-EU trade group ahead of the next India-EU summit in October.