The Indian Government has announced its decision to begin negotiations with New Zealand for a Free Trade Agreement (FTA) and according to indications, the first round of talks would begin in less than five weeks from now.
While the prospect of such an agreement has been on the anvil for the past three years, the pace has quickened over the past three months, with both sides showing increasing interest in such a tie-up.
The Indian High Commissioner, Retired Admiral Sureesh Mehta has said on more than one occasion that he would like to see the talks progress well, and progress quickly so that the benefits of an agreement could be available to both sides.
But as we have mentioned often, FTA negotiations are not easy to come by.
India has made it clear that the agricultural sector would not be open to negotiations, for uninterrupted import of agricultural commodities and dairy products would hurt its economy and no Government that wants to stay in power can afford to upset a vast majority of the population that is dependent on it.
Agriculture is also the mainstay of New Zealand and the economy depends largely on its exports from this sector.
Besides, India has not yet indicated if it would ease the tariff (a whopping 500%) on wine imports from New Zealand – another major export from this country.
The imponderables are many and it would take patience, perseverance and negotiating skills to walk through the FTA process with success.
Mr Mehta has also indicated that India may insist on joint venture partners investing substantially (at least 30% of the value of contracts) in his country to boost the Indian economy, employment and of course foreign exchange earnings.
Having said all these, there are several areas in which progress can be made without much haggling. One of these would be export of agro-technology, in which New Zealand has a global edge. India is keen to modernise its agricultural sector and this country’s assistance would generate enormous goodwill and ease the process for talks.
Timber export is another area in which New Zealand has immense potential but the current price war perpetrated by some New Zealand exporters is seen as self-inflected wound, hurting no one but the exporters themselves.
The New Zealand Government will do well to address the issue and discipline the exporters in order that everyone involved stands to benefit.
Several other areas of export including coal, wool, hides and skin, machinery and (some) dairy products have potential for enlargement.
India is allergic to any suggestion for concessions on dairy and agricultural exports from New Zealand, apart from offering preferential tariffs on a number of goods.
Wellington will look for a way around the problem but scope exists for marked improvement in a number of other sectors including investment, venture capital, joint ventures, distribution agreements, direct air link, tourism and education.
Source : indiannewslink.co.nz