Studies by Dr H A C Prasad in collaboration with India Exim Bank1 have shown that there are some areas where there is scope for India to negotiate further with its FTA partners Here the following 2 issues are examined.
1)Some sectors/areas where there is scope for India to negotiate further with its FTA partners
There are some sectors where there is scope for further negotiations with our trading partners. Some examples are given below.
For example,in the case of the leather and footwear sector, While under India-Japan CEPA, Japan has agreed to eliminate tariffs for most of the items in Chapter 41 (finished leather) and Chapter 42 (Leather goods) by 2021-22, for footwear, duty concession to India has been given only for some categories and most items have MFN duties as high as 27%-30%. Japan is not a major manufacturer of footwear and India needs to renegotiate with Japan to include all types of footwear under HS 6401 to 6405 for duty concessions on a reciprocal basis.
In the case of Marine products, India’s present FTAs have not helped much compared to EU-Vietnam and EU-Ecuador FTAs where Vietnam and Ecuador have greatly benefitted. Despite having a CEPA with Japan, farmed shrimp exports are subject to 100% sampling of Vannamei and 30% sampling of farmed Black Tiger Shrimp from India for antibiotic residue (AOZ).While India needs to have better SPS standards, fair treatment should also be given for imports from Indian by India’s FTA partners.
India can negotiate with Japan on these issues during the proposed Review of the India-Japan FTA.
2) Sectors/Areas where India can negotiate with FTA partners for fair Treatment
Another related issue is India getting less favorable treatment from India’s FTA partners compared to the higher tariff concessions given by them to India’s competitors.
In the Agricultural sector, higher concessions are given by India’s FTA partners like Japan, South Korea, China and the Philippines to other countries compared to India with respect to Coffee. Other markets like the EU, Russia and Turkey also give higher concessions to other competitors of India. There is scope to negotiate with these countries, though political factors will also be important as in the case of Turkey. So, any tariff rationalization policy with respect to FTAs should also consider whether fair treatment is extended to India by its FTA partner and negotiate for the same.
Since, some countries are in multiple FTAs and the same commodities are included in tariff concessions in different FTAs, there should be some uniformity. The tariff concession for a tariff line by India should be the same for all FTAs. This will help in avoiding an FTA partner trying to use or misuse the best concessions in the FTA which has relatively lower preferential tariffs. This will also help in removing the confusion to domestic producers and make actions of a multiple FTA partner predictable.
Many FTAs of India to developing countries have resulted in mainly giving tariff concessions. So, a proper evaluation of the less developed and developing countries needs to be done to see whether they have graduated to a level where tariff concessions may not be needed for some items or whether the same countries are competing against India, using the tariff concessions. With US withdrawing GSP benefits to India but not to some developing FTA partners of India, India will be more open to competition in the US market from its FTA/RTA partners. In this context, India has to see whether any of the existing concessions given to LDCs have to be re-evaluated. Along with the ‘graduation clause’ for the developing country FTA partners, there is a need for a ‘sunset clause’ for some concessions to FTA partners.
1 a) "Impact of Covid-19 on India's International Trade: Strategies and Policy Perspective", (In collaboration with India EXIM Bank), Special publications, India EXIM Bank, February 2021
b) “Relooking India's Tariff Policy Framework”, (In collaboration with India EXIM Bank), Special publications, India EXIM Bank, March 2020
