India to sign free trade pact with Thailand

India and Thailand will sign a protocol tomorrow to pave the way for establishing a free trade area between the two nations by 2010.

The protocol will operationalise the 'Early Harvest Scheme' under which the two countries will bring down tariffs to zero per cent on 82 items by September 1, 2006 in three phases.

The protocol would also contain an annexure on rules of origin to ensure that goods from third countries are not diverted into India. Thailand already has a free trade agreement (FTA) with China and Australia.

Commerce and Industry Minister Kamal Nath and Thai Commerce Minister Watana Muangsook will sign the protocol. The 'Early Harvest Scheme' marks implementation of the first phase of the FTA wherein tariffs are reduced on select items.

Under the first phase of implementation of the agreement, tariffs would be brought down by 50 per cent in the first year and 75 per cent in the second year on 82 items.

From 2006 onwards, both countries would have a duty free trade regime on 82 items. The second phase of the FTA would begin after that for both nations to have a free trade area by 2010.

The 82 items on which tariffs are to be reduced include gear boxes, television picture tubes, wrist watches, parts of seats, refrigerators, textile spindles, spinning rings, machinery for moulding pipes, boiler shells ball bearings, fly wheels, pulleys, signalling equipments and printed circuits.