India for trade concessions to smaller South Asian economies

Thursday, 17 January 2008, 17:09 IST
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New Delhi: India may soon announce concessions in the sensitive trade list for the least developed countries (LDC) in South Asia under the South Asia Free Trade Agreement (Safta). Delivering the keynote address at a seminar on "Saarc: Towards Greater connectivity", Minister Of State For Commerce Jairam Ramesh said India was currently reviewing its list of 744 sensitive trade items, which are dominated by agriculture and textiles. "Prime Minister (Manmohan Singh) mandated us to review the list from point of view of LDCs... So we may make an announcement shortly," he said at the function organised by Institute of Peace and Conflict Studies (IPCS). He pointed out that India had implemented its commitment made by the prime minister at the Saarc (South Asian Association for Regional Cooperation) Summit in April 2007. India had already issued a notification for dropping import duties to zero on 4,537 items from the five less developed countries in South Asia on the first day of 2008, Ramesh said. He said liberalising the investment regime could solve the bugbear of India's neighbouring nations about the surplus deficit. "I believe that investment is the only way to manage trade deficit with India," said Ramesh. He gave the example of Sri Lanka that had a deficit of one to ten with India just a decade ago. "Now after the FTA (free trade agreement), there has been investment by Indian firms, who have set up factories and then sell products back to India. The deficit has now come down to one to five, which is manageable." He admitted India would have to also give the right signals on the issue of investment and pointed out that after Sri Lanka, Bangladesh has now been removed from the list of countries from where foreign direct investment was banned, which leaves Pakistan "in solitary splendour". He, however, felt that even Pakistan could eventually be removed from this list. "There is now a strong case for a similar treatment for Pakistan on a case-to-case basis." He pointed out the next phase of Safta deals with investment and services. The next meeting on Safta will be held in Delhi next month, when Afghanistan will be inducted as the eighth member. He added India had agreed to import eight million items of duty-free garments from Bangladesh, which will add $60-65 million to its revenues. "But, always the last mile of issuing the notification is usually the most difficult, but we are expecting it to be announced in a few days," he said. The commerce minister said Pakistan had given a list of nine items for trade across the Line of Control (LoC) in Jammu and Kashmir. "We had given them a list of 14, which Pakistan pruned down to nine. But, even this is something to start with covering agriculture and handicrafts," he said. The agreement for LoC trade was "ready" to be inked, which also included the locations for trade but the internal troubles in Pakistan have forced a postponement.
Source: IANS
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