Govt mulls concessions for Asean trade pact

India is considering making concessions on the five-year "standstill" period for duty cuts on crude and refined palm oil, pepper and black tea imports in its proposed free trade agreement (FTA) with the Association of South East Asian Nations, according to a senior commerce ministry official.

If this is done, duty cuts on these "highly sensitive" commodities may begin in January 2008, when the treaty is expected to be in force, instead of 2011, as India has offered.

This concession is being considered to meet the demands of some Asean member-nations, chiefly Malaysia.

The standstill clause was described by government officials as "the most crucial stumbling block" in the Indo-Asean FTA.

So far, India has offered duty cuts in equated installments beginning 2011 to 50 per cent by 2022 on these items. India currently imposes a 100 per cent duty on black tea, 60 per cent on pepper, 75 per cent on refined palm oil and 65 per cent on crude palm oil.

Asean was pressing for the elimination of the standstill period and cuts of more than 50 per cent. "The matter will be dealt with at the very last stage of the negotiations, that is, by July," the commerce ministry official said.

The official also clarified that India would make some adjustments to a clause that specifies that any of the 490 items on the negative list (on which there will be no duty cuts) cannot exceed the 5 per cent limit annual trade in value terms between India and Asean or vice-versa.

This clause was finalised at the recently concluded India-Asean summit in the Philippines.

India may now negotiate to set individual limits for trade coverage.

"While this is an overall limit for the entire Asean bloc, we will negotiate separate limits with each country," he added. The limits could range from 15 per cent to 1 per cent.