India urged to study Singapore, Thailand FTAs during ASEAN FTA review

India should investigate why some products or raw material that are not produced or manufactured in Singapore are shipped to India from there as that adds to cost and is bad business, GTRI co-founder Ajay Srivastava told a news agency.

India and ASEAN have agreed to review their trade pact and aim to conclude the exercise by 2025.

India’s FTAs with Singapore and Thailand have more relaxed rules of origin for products. The one with Thailand is called early harvest scheme (EHS). As substantial imports may be happening through EHS, the two FTAs may be studied together, GTRI said in a report.

ASEAN members are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Five ASEAN countries—Indonesia, Singapore, Malaysia, Thailand and Vietnam—account for 92.7 per cent of India's exports to and 97.4 per cent imports from the bloc.

India's export to ASEAN were worth $19.1 billion in fiscal 2008-09 and rose to $44 billion in fiscal 2022-23, while imports from there rose to $87.6 billion in the last fiscal against $26.2 billion in FY09.

In FY23, India imported items worth $28.8 billion from Indonesia and the primary imports included coal ($14.4 billion)—both steam coal ($13.7 billion) and coking coal ($0.7 billion). When steam coal is available in abundance in India, the country should focus on using domestic coal, Shrivastava noted.

Similarly, offering minimum support price on mustard and other similar oils will cut domestic prices and gradually wean people away from inferior imported palm oil, he said.

The ASEAN FTA review may not help reduce most imports from Malaysia either, as ASEAN, unlike the European Union, operates as a group of countries with an FTA rather than a customs union, he said. In FTA negotiations, each ASEAN member country typically negotiates its own tariff arrangement with a partner.

Therefore, India should have reciprocated by offering a different tariff schedules for each ASEAN member, taking into account the specific sensitivities of trade with each country, the GTRI report said.

"Instead, India, on the insistence of ASEAN, offered a single tariff schedule that applies to all the members. This simplifies the process but limits the effectiveness of India's exclusion list. It does not address the specific sensitivities with individual ASEAN countries as effectively as separate schedules would,” the report added.

Fibre2Fashion News Desk (DS)