The Hindu Business Line : SAFTA to come into force from Jan, to include 5,500 tariff lines — Rules of Origin for fabric sourcing from India must

Industry & Economy - Foreign Trade

SAFTA to come into force from Jan, to include 5,500 tariff lines — Rules of Origin for fabric sourcing from India must

Our Bureau

The tariff lines have been worked out keeping in mind the highly skewed South Asia intra-regional trade which was heavily in India's favour.

Kolkata , Dec. 26

THE South Asian Free Trade Agreement (SAFTA), involving the seven SAARC countries, is scheduled to become operational from January 1, 2006.

It will include some 5,500 tariff lines, taking into account both agricultural (695) and industrial products. The negative list is expected to have some 900-950 items, including some 300 primary agricultural products.

Making a presentation on `Emerging opportunities in Asean region and the Look East Policy' here today at the golden jubilee seminar programme of the Engineering Export Promotion Council (EEPC), Mr S.N. Menon, Union Commerce Secretary, said it would have immediate relevance for only Sri Lanka, Bangladesh, India and Pakistan, as the other three are LDCs (Least Developed Countries).

He said the tariff lines have been worked out keeping in mind the highly skewed South Asia intra-regional trade which was heavily in India's favour. In short, India will have to open up more to accommodate goods from the other SAARC countries.

Each country, however, will have a negative list, and tariffs are expected to go down to a level of 5 per cent between 2006 and 2011-12 on an annual basis, in tandem with the applied duties. While Pakistan is strong in textiles, Bangladesh's key strengths are in apparels, and separate Rules of Origin are being applied to the free trade agreement, under which mandatory fabric sourcing for a specified number of garments has to be done from India.

Mr Menon told Business Line that while Pakistan has already cleared it, Bangladesh was expected to do so in the next two days. India, he clarified, would ratify it on December 29, 2005, after the Cabinet clears it. Necessary steps are being taken to beef up the land ports, as bulk of the trade would be carried out through the land ports. He said the land routes as well as customs infrastructure have to be strengthened.

According to him, an inland port management authority was also being considered, and the Ministries concerned are working on this.

He said there was also another initiative under the name of South Asia sub regional Economic Cooperation (SASEC), which is being sponsored by the Asian Development Bank (ADB). Mr Menon said the FTA will lead to greater political understanding between the SAARC nations.

Having both technical support and project commissioning schemes, the governments of Bhutan, Bangladesh, Nepal, India and Myanmar are working together with the ADB in this regard. Mr Menon said negotiations on the Indo-Asean FTA were proceeding on expected lines, and expected to be concluded by June 2006, and set to become operational from January 1, 2007.

Earlier, in his presentation, the Commerce Secretary said with the eastward expansion of Asean to include Myanmar, both India and Asean were no longer mere maritime neighbours, but actually shared a land boundary of over 1600 km.