After FTA, exports to Thailand surge 31%

People sceptical of free trade agreements may be forced to rethink their position, given the turnaround in India's exports to Thailand.

After a decline of 2 per cent in its export of 82 items, in the first 12 months of the agreement, exports have jumped by 31 per cent between August 2004 and December 2005.

As per provisional analysis made by the commerce ministry, exports of 82 items including auto components, to Thailand, increased to $178 million compared with around $136 million during August 2004-December 2005.

Growth in the overall merchandise exports to Thailand during this period was around 17 per cent at $1.40 billion.

The turnaround is significant since some of the domestic sectors like automobile components and picture tubes had sent representations to the government regarding the adverse impact of FTA on Indian industry.

Under the FTA, which was operationalised from September 1, 2004, tariffs were cut by 50 per cent on 82 items, and were increased to 75 per cent from September 2005. The duty on 82 items will be brought down to zero from September 2006.

The increase in exports of 82 items is being attributed to increase in exports of iron or non-alloy steel and gearboxes from India. Export of gear boxes have increased to $31 million from just $3 million, growth of over 1,000 per cent.

Similarly, other semi-finished products of iron or non-alloy steel have recorded a growth rate of over $720 million to $5.37 million compared with $0.71 million during August 2004-December 2005.

As per the analysis, of the 82 products, around 35 items have registered an increase in exports ranging from two per cent to over 4,000 per cent.

Thailand's exports of 82 products to India during the same period witnessed growth of around 80 per cent to $299 million, compared with $166 million between August 2004 and December 2005.

But, there are two items whose surge in imports continues to be a cause for concern "" colour picture tubes and aluminium alloys.

Import of aluminium alloys increased by over 500 per cent to around $16 million from $2.6 million during August 2004-December 2005. Similarly, import of colour picture tubes also increased by over 500 per cent to $17.4 million from $2.8 billion in the corresponding period the previous year.