The Hindu Business Line : Go slow on FTA with China, says Assocham

Sharing ideas: Mr Venugopal Dhoot, President, Assocham, and Mr D.S. Rawat, Secretary-General, releasing a study on “India’s FTAs and Indian Industry 2008” , in the Capital on Saturday. —

Our Bureau

New Delhi, April 5 The Associated Chamber of Commerce and Industry of India has suggested that the Centre wait for a minimum period of five years before finalising a free trade agreement with China because India’s tariff structures are much higher compared to China; with an FTA in place the Indian market could be flooded with Chinese products.

It said the India-China FTA trade cooperation should start with a preferential trade agreement with reduced tariff in a phased manner.

The chamber President, Mr Venugopal Dhoot, in a release said: “With the high tariff regime in India at about 12.5 per cent and low tariff regime in China of less than 6 per cent, an FTA between India and China might affect the economic efficiency between these countries as they would exclude and discriminate other countries.”

A study on FTAs released by the chamber also points out that the problem for India is that the trade deficit with China has been growing from $506.74 million in 1994-95 to $1,424.04 million in 2004-05.

India’s export to China mainly consists of iron ore, primary and semi-finished iron and steel, plastic and linoleum products, processed minerals etc. On the other hand India’s imports from China are generally electronic goods, coal, coke and lubricants as well as organic chemicals, silk yarn and fabrics, non-electrical machinery etc.

Mr Dhoot also pointed out that trade and comprehensive economic agreements that have been signed in the past with various countries and regional blocks have actually resulted in very few facilities and have hurt the economic interest of the Indian industry.

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