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The Finance Ministry has cut Customs duty on 539 manufactured items from Singapore.
This is part of an agreed tariff elimination package under a bilateral free trade pact.
The latest move will further stimulate trade in goods, which both sides want to double to $32 billion by 2015.
The tariff cuts on the 539 items are expected to bring down the import cost of a slew of manufactured goods, including mechanical appliances, machinery, textiles and textile articles, rubber and plastic articles.
It would, however, mean lower protection for the domestic industry in these sectors, industry observers said.
Since the bilateral free trade pact, officially known as the Comprehensive Economic Cooperation Agreement (CECA), was operationalised in August 2005, the two countries have opened up their trade in goods by reducing Customs duties. Both sides had, in May 2010, agreed to double their annual bilateral trade in goods from $16 billion to $32 billion by 2015.
The first review of the CECA took place in 2007 and India had then agreed to expand the tariff liberalisation package to 539 additional tariff lines within the trade in the goods chapter. Of the 539 tariff lines, India had agreed to eliminate tariff on 307 items in five equal cuts between January 15, 2008 and December 1, 2011. These 307 items mainly comprise base metals, machinery, chemicals, textiles and textile articles.
For another 97 items — mainly machinery and mechanical appliances, plastic and rubber articles, textile articles — tariff elimination is to be achieved in nine equal cuts between January 15, 2008 and December 1, 2015. For 135 products, tariff reduction to 5 per cent duty is to be achieved in nine equal cuts between January 15, 2008 and December 1, 2015.
With the latest round of Customs duty reductions (on 539 items), the import duty on as many as 307 items has been brought closer to zero and are well on course to be eliminated from December 1 this year.
On the foreign direct investment (FDI) front, Singapore is the single largest investor in India among the Asean countries and the second largest among all countries. The FDI inflows into India from Singapore during 2009-10 stood at $2.4 billion. The cumulative FDI inflows during April 2000 and March 2010 stood at $10.2 billion, official data showed.
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