South Africa is working on a new policy whereby companies eyeing coal mines or sourcing coal from this country will stand a better chance if they invest in coal beneficiation facilities or a power plant, an Indian official has said.
“South Africa is working on a new policy that encourages value addition. In future, companies that do some kind of value addition (set up coal beneficiation facilities) or set up power plants here, will have better chances (of securing coal),” Indian high commissioner to South Africa, Virendra Gupta, told visiting Indian reporters in Durban on Sunday.
Gupta said South Africa had adopted the policy guidelines, which were more like directive principles.
South Africa is also working on a new power policy, which will invite private sector companies to come and set up power plants in this country. Indian firms eyeing mines or sourcing deals, would be keenly watching these new policy developments.
Trade pact by mid-2011
India and South African nations were expected to sign a trade pact by the middle of this year, which aimed at reducing tariffs on certain items traded between the nations, Commerce and Industry Minister Anand Sharma told visiting Indian journalists here.
“We both are pushing it (PTA agreement) very hard and want to complete it at least by the middle of the year,” he said. The India-Southern Africa Customs Union Preferential Trade Agreement will help the countries sign the pact by reducing tariffs for certain products. Tariffs are Customs duties on merchandise imports.
The Southern African Customs Union (SACU) consists of Botswana, Lesotho, Namibia, South Africa, and Swaziland.
South Africa's Minister of Trade and Industry Rob Davies said, “We are confident that we will be able to reach a mutual beneficial agreement in not too distant future.” The PTA, Sharma believes, would boost bilateral trade in products like pharmaceuticals, machinery, automobiles, where India enjoys a competitive advantage.
The exchange of lists is expected to take place soon. “I think we have made some progress and specific exchange of list will take place within the next two weeks,” Sharma said. India is South Africa’s largest trading partner in South and Southeast Asia and one of its top-10 trading partners globally.
Total trade has more than doubled since 2004-05 to cross $7.5 billion. The bilateral trade has grown from $3.18 billion in 2004-05 to $7.73 billion in 2009-10.
In a free trade agreement, two countries reduce or eliminate duties on the maximum number of products they trade while in a PTA, countries signing the pact reduce tariffs for only certain products. In a PTA, the tariffs are not necessarily eliminated, but they are lower than for countries not party to the pact.
India’s exports to South Africa comprise mineral fuels, automobiles, iron and steel, machinery and instruments, chemicals, pharmaceuticals, cotton yarn and fabrics.
Imports include gold, aluminium, phosphoric acid, coal, pulp and waste paper, precious stones, including diamonds.
$15-billion trade by 2014
India and South had also agreed on a new a trade target of $15 billion by 2014, after the two countries were all set to achieve the current target of $10 billion trade by 2012 much earlier than expected, Sharma said on Monday.
The two countries would achieve the trade target of $10 billion within this financial year, he said after meeting Jack Davies, in Durban and Johannesburg on Sunday and Monday.
Sharma was in Durban to participate in the commemorative celebrations of 150 years of the arrival of Indians in South Africa. “It is a strategic and special relationship,” said Sharma. India is the sixth-largest export destination for South Africa. The two countries are set to breach the $10-billion two-way trade target by next month, 23 months ahead of schedule. The trade figure stood at $8.45 billion between January and November 2010, said an official.
