G. Srinivasan

New Delhi, May 30

INDIA'S revised offer on trade in services, under the ongoing liberalisation talks of the WTO, cover a broad spectrum and new areas ranging from advertising, management consultancy, real estate services to architecture and veterinary services.

Highly-placed sources in the Government told Business Line here today that the Government is not keen on the opening up of services sector for retail, legal and auditing services in view of the opposition from domestic industries in these domains, which felt that competition at this stage would prevent them from developing their full potential.

The sources said the revised offer on services, discussed at a meeting of the Cabinet Committee on WTO matters chaired by the Prime Minister, Dr Manmohan Singh, includes other new services for liberalisation such as urban planning and landscape architecture, rental and leasing services, courier services, distribution, wholesale and commission agents.

An official statement issued here said that the Cabinet Committee on WTO directed the Ministry of Commerce to make improved offers in sectors wherein offers were made as part of initial offers in June 2003. It also permitted the Commerce Ministry the leeway and flexibility to move forward in the services negotiations within the limits of its autonomous liberalisation, such as the one that had been done in the realm of telecommunications and construction sector.

The sectors so far offered by India for opening up include business services, construction and related engineering services, health-related and social services, tourism and travel-related services, maritime services and transport services.

The Union Commerce and Industry Minister, Mr Kamal Nath, soon after the one-and-a-half-hour Cabinet meeting, told reporters, "What we ultimately offer will depend on what is offered to us." He said that given India's strength in services, the country has offensive interests on a range of services for liberalisation. India's earnings through services exports are estimated at $30 billion, and the Boston Consulting Group estimates this potential to increase to $200 billion by 2020, if the developed countries provide better access to their markets.

The sources said that India has been assiduously taking part in the ongoing services negotiations, largely to leverage its revealed comparative advantages with a view to spurring its trading partners to undertake more liberal commitments in cross-border supply of services (Mode 1), such as business process outsourcing and movement of natural persons (Mode 4).

But the core interest of most of India's trading partners as evident from the requests is in establishing commercial presence (Mode 3) in which the request is either for binding the current applicable foreign direct investment policy or to offer a more liberal policy.

It is to reconcile these conflicting interests that India has come out with a revised offer, thereby signalling all members to engage substantively and substantially in the request-offer process so as to get improved and refined commitments in sectors of offensive interest to New Delhi, the sources said.

Alongside, the country is engaged in bilateral discussions with its trading partners on initial conditional offer and also on the response to its requests, especially in Modes 1 and 4, in the initial offers tabled by the trading partners.

(This article was published in the Business Line print edition dated May 31, 2005)
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