Indo-Thai tariff cuts okayed

Early harvest scheme comes into effect from september 1

India and Thailand today signed the protocol to implement the Early Harvest Scheme (EHS) under the Framework Agreement on Free Trade Area (FTA).

Accordingly, 82 identified products, accounting for 7 per cent of bilateral trade will enjoy concessional tariffs from September 1. Thailand has now become the second country apart from Sri Lanka with which India would be implementing an FTA in a phased manner.

The Protocol was signed by Minister for Commerce and Industry Kamal Nath, on behalf of India and Mr. Watana Muangsook, Minister of Commerce, on behalf of the government of Thailand.

The key elements of the Framework Agreement cover FTA in goods, services and investment, and areas of economic cooperation. Negotiations for an FTA in goods are expected to conclude by March 2005 allowing for the establishment of an FTA by 2010.

Similarly, negotiations for an FTA in services and investment is likely to be concluded by January 2006. Terming the agreement as a major step in India's "Look East Policy", Commerce and Industry Minister Kamal Nath said the agreement would help in increasing formation of joint ventures and investments in both countries.

Allaying fears of some sections of the industry on the FTA, Nath said, "the industry is assured that the government will consult you in every step of the way. The intention of the FTA is to promote the interest of the industry".

The minister later told reporters that the government was aware that the domestic inverted duty structure required modification and said that measures to do so would be taken soon not only in the context of the FTAs but also the multilateral trading framework.

Speaking on the occassion, the Thai Minister of Commerce, Watana Muangsook said, "both countries have accomplished the goal to maximise the national benefits At the same time they have created a win-win situation that satisfies both countries".

The Thai minister emphasised that Thailand was entering into an FTA with India because it wanted to and not because it was under any pressure to do so. The total trade between India and Thailand has almost doubled from US $ 777.15 million in 1999-2000 to US $1.4 billion in 2003-04.

The Joint Study Group, which was constituted to examine the feasibility of FTA between India and Thailand, has predicted that an FTA would quickly lead to a doubling of trade between the two countries.