| Date: |
20-10-2014 |
| Subject: |
India unlikely to upgrade free trade pact with South Korea |
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NEW DELHI: India is unlikely to accede to South Korea's demand for an upgrade of the comprehensive free trade pact between the two countries, given the early findings of reviews conducted by the government that point toward imbalances in this and other such accords.
South Korea wants a speeding up of the duty reduction schedule for machinery, plastics and chemicals to nil by 2015 instead of 2018, as per the pact.
It is keen to set up small and medium-sized enterprises ( SMEs) in India that would likely benefit from the cheaper imports.
"We cannot upgrade the CEPA (Comprehensive Economic Partnership Agreement) as the agreement is already tilted in favour of Korea. The initial findings show that we have lost out on not only goods, but also services and investment, where we were expecting huge gains," said an official who didn't want to be named. "The trade deficit has only widened since the signing of the pact. We will ask Korea to address that." India's trade deficit with South Korea widened from $5.1 billion in 2009-10 to $8.2 billion in 2013-14.
The government has conducted a review of trade agreements signed by India, including those with Japan, the Association of Southeast Asian Nations (Asean) and Singapore to assess their impact on the country's exports and investments to chart a strategy for future negotiations.
The findings suggest Indian exporters have not been able to utilise the options available under the pacts due to lack of awareness, falling tariffs across the globe and exporters avoiding the free trade agreement (FTA) route due to rules-of-origin documentation hassles apart from nontariff, market-access barriers.
What is surprising is India could not even gain much in services and investment.
The studies show that India's share of Japan's global investment has shrunk after their CEPA — which was signed in 2010 and came into force in 2011 — from 4.5% to 1.6% between 2008 and 2013, falling in absolute terms from $5.5 billion to $2.1 billion.
Source : economictimes.indiatimes.com
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