The Hindu Business Line : High-tech machines may be off sensitive list for India-EU trade

New Delhi, Sept. 28 High-tech machines are unlikely to be included in the sensitive list of the proposed India-European Union bilateral trade and investment agreement (BTIA), the negotiations for which have already begun.

Such machines may be excluded from the sensitive list as downstream domestic industry may require better technology, according to a paper prepared by Unctad India programme as a draft to facilitate discussion on India’s approach to sensitive list in India-EU Trade and Investment Agreement. The final sensitive list would emerge only after extensive negotiations between India and the EU.

Low tech machines

Indications are also that low technology machines would be included in the final sensitive list to encourage domestic machine and machine making industry.

Sensitive list refers to the list of products where no preferential tariffs would be offered and excluded from the schedule of tariff elimination.

Under the India-EU trade agreement, which would include FTA on goods and services as well as agreements on investment, India is expected to commit to a zero duty customs regime on substantially all imports from the EC. Similarly, all EC member states are expected to commit to zero customs duty regime on substantially all imports from India.

As many as 49 tariff lines in the proposed final sensitive list, comprising 328 tariff lines, relate to machinery and mechanical appliances, which have the maximum tariff lines in the list.

About 38 tariff lines are to be included from chapter 40, rubber and articles thereof, where the EC has large production and domestic industry in India is growing.

About 22 tariff lines from chapter 20 on preparations of vegetables, fruits.

Nuts etc, where the EC is generally more competitive than the growing domestic industry in India, are likely to be included in the list.

Also, 12 tariff lines relating to bird’s eggs, edible products of animal origin may be included in sensitive list in recognition of the fact that the EC is very competitive in these tariff lines and significant subsidies are provided to domestic the producers.

Largest partner

The EC is India’s largest trading partner and accounts for about one-fifth of India’s total trade. India contributes about 1.5 per cent of the total EC trade and is its 10th largest partner.

India’s top 5 imports from the EC for 2006-07 consisted mainly of machinery and mechanical appliances, gem and jewellery, electrical machinery and parts, iron and steel and optical and medical equipment.

On the other hand, the country’s top 5 exports to the EC for the year 2006-07 were mainly textiles and clothing, mineral fuels and mineral oils, gem and jewellery, iron and steel and organic chemicals.

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