New Delhi, Aug 21 : The finance ministry has initiated a review of India’s free trade agreements (FTAs) to assess its impact on the country’s revenue and manufacturing, according to a report in The Economic Times.
The news comes when India is in talks for a Regional Comprehensive Economic Partnership (RCEP) which was proposed by the Association of South-East Asian Nations (ASEAN) as the biggest trade proposal. It has 16 participating countries and was expected to conclude this year.
The review will decide the future of RCEP along with other FTAs. The report pointed out that the government is also targeting to increase the share of manufacturing in the economy to 25 from about 16 percent (at current prices) by 2022.
Another reason to assess the current trade arrangement was given by tax authorities who have seen imports being brought from FTA route– to save on raised custom duties. It sometimes beat the idea of tariffs discouraging import of certain goods. Moreover, imports from non-FTA nations could claim treaty benefits if got from the FTA route.
Large companies could have been violating these rules which undermines the swadeshi movement under Make in India.
This week, the Solvent Extractors’ Association of India had also filed a petition on behalf of Indian palm oil producers against increased imports from Malaysia hurting the domestic market. They claim that lower custom duties under the Comprehensive Economic Cooperation Agreement (CECA) have negatively impacted domestic production and sales. A probe has been initiated after the complaint.
The review will help the country implement better trade pacts if they hurt domestic manufactures.
