Imports from countries with which India has signed Free Trade Agreements (FTAs ) have not substantially affected Indian manufacturing, according to the initial findings of an impact study being carried out by the Commerce Ministry.
The Department of Industrial Policy & Promotion, however, believes that FTAs have hit industrial production and ameliorative measures need to be taken.
“It is a myth that FTAs are harming domestic manufacturing,” Commerce Secretary Rajeev Kher said at a conference organised by the Confederation of Indian Industry on Tuesday.
The analysis shows that following India’s FTAs with Japan, Malaysia, Asean and Korea, preferential exports have increased by 22 per cent, 3.47 per cent, 17 per cent and 21 per cent, respectively. “The numbers shouldn’t cause the country terrible worry. But where imports had increased more than others the Ministry is taking a look,” he said.
Countering Kher, DIPP Secretary Amitabh Kant said that FTAs had adversely affected manufacturing. “This has to be set right. We have to identify sectors that have taken a hit and find out mechanism to address their problems,” Kant said, addressing industrialists.
Kant said that the “inverted duty structure” created by FTAs was being addressed by the Government by reducing import duties on raw materials and more needed to be done.
The Commerce Ministry is still collecting figures on how much India has been able to increase its exports due to the FTAs. “Since our statistics does not capture preferential trade data, we are trying to get those from our trading partners,” Kher said.
On the need to incentivise Special Economic Zones, the Commerce Secretary said that a package, which could include the proposal to restore tax benefits to the zones, was in the works. “I hope it is announced sooner than later,” he said replying to a question on when it would be announced.