India offers new concessions for Asean FTA

India has offered a new set of concessions to the 10-member Association of South East Asian Nations (Asean), during the negotiations in the last two months for a proposed free trade agreement.

The latest offer by India includes an enhanced list of items on which duties would be eliminated as well as decreasing the time-frame within which the duties on certain highly sensitive agricultural products would be brought down. The negotiations for the proposed free trade agreement are likely to conclude by July.

India has moved over 150 items from the sensitive list to the normal list. With this, the total number of items on which duties will be eliminated stands at 4,180.

As a result, the number of items in the sensitive list has been reduced to 550 from the earlier figure of 709 items. Most of these products belong to sectors like textiles, machinery and auto as well as chemicals and plastic. Duties on the items included in the sensitive list will be significantly reduced.

"The new items will be finalised after consultations with the domestic industry in the next one to two months," said a commerce ministry official.

With the new set of offers, India has committed tariff elimination in 80 per cent of its total tariff lines, which includes 5,254 items. However, the Asean demand has been for 83 per cent of the total Indian tariff lines.

In addition, India has also offered to reduce duties on the highly sensitive agriculture products like palm oil (crude and refined), tea, coffee and pepper by the year 2018, instead of the earlier deadline of 2022.

"The duty reductions will be done in phases, which will mean a reduction of two to three per cent per year, spread over a period of 11 years. The reduction will start from the year of signing the economic treaty instead of the earlier proposal of having a five year grace period," the official added.

Coffee is the new addition in the highly sensitive list of items, which was earlier in the negative list, in which no tariff reduction or elimination would take place.

"In the recent negotiations, we found that coffee constituted a substantial portion of Vietnam's exports. Hence we had to take it off from the negative list and include it in the highly sensitive list," the official added.

Negotiations between the Asean trading bloc and India were stuck for a long time because of differences over concessions on items in the highly sensitive list. The last major offer from India came in December last year when it offered to decrease the items in the negative list to 490.

Bilateral trade between India and Asean countries stood at $ 22 billion in 2005-06.