India Bulletin News

It is necessary to examine India’s Asean membership and bilateral free trade agreement with Singapore: GTRI

<p>Think-tank GTRI Sunday recommended that the government reassess its trade deal with the 10-nation grouping while simultaneously studying the bilateral free trade agreement with Singapore and as a member of the Asean bloc.<img decoding=”async” class=”alignnone wp-image-289905″ src=”” alt=” it is necessary to examine indias asean membership and bilateral free trade agreem” width=”1217″ height=”733″ title=”It is necessary to examine India's Asean membership and bilateral free trade agreement with Singapore: GTRI 12″ srcset=” 289w,×90.jpg 150w” sizes=”(max-width: 1217px) 100vw, 1217px” /></p>
<p>India and Singapore have a free trade agreement in commodities dating back to 2010. Singapore is a member of the 10-nation Asean grouping. In addition, India and Singapore concluded a comprehensive free trade agreement (FTA) in 2005.</p>
<p>As another member of the Association of Southeast Asian Nations (Asean), Thailand was the subject of a similar exercise proposed by the Global Trade Research Initiative (GTRI). In 2006, India and Thailand inked a limited free trade agreement.</p>
<p>These recommendations are important since India and Asean have decided to revise their trade agreement, with plans to wrap it up by 2025.</p>
<p>The countries that make up Asean include Brunei Darussalam, Singapore, Thailand, Vietnam, Malaysia, Myanmar, Lao PDR, Cambodia, Indonesia, and the Philippines.</p>
<p>Of these, 92.7 percent of India’s exports and 97.3 percent of its imports from Asean are accounted for by five nations: Vietnam, Indonesia, Singapore, Malaysia, Thailand, and Singapore.</p>
<p>From $19.1 billion in 2008–09 to $44 billion in 2022–23, India’s exports to Asean grew. However, compared to $26.2 billion in 2008–09, imports from the ten-nation bloc increased to $87.6 billion in the most recent fiscal year.</p>
<p>“India and Singapore have their own free trade agreement (FTA) with less restrictions on product origin. One might study the two FTAs concurrently. The India-Asean FTA provides stricter origin criteria than the early harvest program (EHS), which is India’s separate free trade agreement with Thailand. It’s possible that significant imports are made via EHS. It is possible to study the two FTAs concurrently, according to GTRI’s report.</p>
<p>According to the research, India imported $28.8 billion worth of commodities in total from Indonesia in 2022–2023; coal accounted for $14.4 billion of those imports, consisting of both steam coal ($13.7 billion) and coking coal ($0.7 billion).</p>
<p>Furthermore, India purchased $5.6 billion worth of palm oil and $0.9 billion worth of copper ore from Indonesia.</p>
<p>India needs these items, and the majority of imports are made at MFN (most favored country) zero tariff, according to the statement. It also claimed that the FTA review may not be useful in reducing these imports.</p>
<p>“In only the last year, the amount of coal imported has climbed by 121%, and the majority of that coal is steam coal, which is widely accessible in India. India need to prioritize utilizing domestic coal. According to GTRI Co-Founder Ajay Srivastava, “offering MSP (minimum support price) on mustard and other comparable oils will cut domestic prices and wean people away from inferior palm oil gradually.”</p>
<p>According to the study, a substantial amount of Singapore’s imports, amounting to $7.2 billion in the previous fiscal year, consisted of electronics, which included computers ($1.7 billion) and integrated circuits ($1.5 billion). Gold, plastics, iron and steel, and a lesser quantity of fertilizers were among the other noteworthy imports.</p>
<p>Neither coal, iron, steel, nor fertilizers are produced in Singapore. These could be transshipped by businesses from Singapore. However, this is terrible business and raises costs. These imports need to be removed from the FTA, but their initial cause has to be looked at. For electronics items, gold, and other value-added standards, Rules of Origins may be examined, the speaker said.</p>
<p>In addition, the value of India’s imports from Malaysia was $12.7 billion in 2022–2023. The primary commodities imported from Malaysia were electronics ($2.2 billion), petroleum products ($3.2 billion), and palm oil ($3.5 billion). Since most of these imports are necessities for India, the FTA review may not be able to reduce the majority of these imports, according to GTRI.</p>
<p>It also said that Asean functions as an FTA-based collection of nations rather than a customs union, in contrast to the European Union. This implies that rather than using a common tariff schedule, each Asean member establishes its own.</p>
<p>Each Asean nation normally negotiates its own tariff structure with a partner like India in free trade agreements (FTAs). It said that, in an ideal world, India would have responded by providing various tariff schedules for every Asean member, taking into consideration the unique sensitivities of trade with each nation.</p>
<p>Instead, India provided a unified price schedule that is applicable to all members at the urging of Asean. Although this streamlines the procedure, India’s exclusion list loses some of its efficacy. Separate schedules would be a more efficient way to handle the particular sensitivities with various Asean nations, the paper said.</p>
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