The Hindu Business Line : FTA: Economic interaction will grow substantially — Mr Satish Sehgal, Director, Board of Trade, Thailand

THE Prime Minister, Dr Manmohan Singh, surprised many on Friday with his announcement that the Government would take a re-look at the free trade agreement with Thailand. One of those was Mr Satish Sehgal, Director of the Board of Trade of Thailand, an apex body that represents the private sector in Thailand.

A publisher whose family migrated to Thailand in the 1940s Mr Sehgal is the only foreigner to be appointed advisor to several Thai ministers. Mr Sehgal spoke to Business Line in Bangkok as Dr Manmohan Singh was addressing members of the Indian community in the Thai capital.

Excerpts from the interview:

Are there apprehensions in Thailand about the FTA?

There have been some apprehensions about some sectors. By and large, businessmen and exporters are convinced the FTA will bring immense benefit to Thailand. A study on the feasibility of the FTA between India and Thailand indicated that Thai exports to India will increase by 106 per cent over the next two-three years, while Indian exports to Thailand will increase by 54 per cent. I have reason to believe there will be fairly substantial growth, and there will be increase in economic interaction.

On the Indian side there is fear among the auto sector especially that it would swamped by imports from Thailand...

You know the representatives of your automobile sector visited Thailand. When they first came here they were very apprehensive. They met the local manufacturers and went back very happy.

There is apprehension that Thailand has a large excess capacity especially with the Japanese car-makers, and that would be used to produce for the Indian market.

There are some products that you do not manufacture in India. Whether you buy them from Thailand or Malaysia or Japan, you need to import them. So what is the difference if you buy from Thailand?

How do you see the early harvest scheme of the FTA taking off?

There are some 82 items in the early harvest programme. These are the items where both countries feel there will be little or no impact on the trading pattern of the two countries nor any significant impact on local industry.

In the first year the duty drops by 50 per cent, by 75 per cent in the second year and to zero in the third year. Once this comes into effect the two countries will continue their negotiations on the other items — there would be thousands of them — over the next two years. I would have liked to see more items included in the early harvest.

Let's face it. The agro sector is very important to both the countries. Currently the list only includes fruits and wheat. Why not livestock? Livestock is very important to both economies. There is no mention of livestock. You have no mention of other grains.

The current trade between the two countries will hit the $2 billion mark. It started at $600 million and went up to $800 million and stayed there for many years. It was only in 2000 that it became $1.2 billion; and now this year hopefully will touch $2 billion. But what is the potential? I think we should be looking at $4 billion, not $2 billion. There are a number of Indian products that can be sold to Thailand.

Can you give an example?

You look at your railway wagons. India makes very good railway wagons. You make transmission towers. Thailand is not buying from India. There are so many engineering products that Thailand could be buying from India.

On the other side India can buy so many products from Thailand which it now buys from competitors.

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FTA: Economic interaction will grow substantially — Mr Satish Sehgal, Director, Board of Trade, Thailand

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