ASEAN softens approach to strike FTA with India

NEW DELHI: After a series of compromises made by India to remove the hitches blocking the India-Asean free trade agreement (FTA), Asean too seems to be doing its bit in the last leg of the negotiations. In its fresh proposals on duty cuts for the five crucial agricultural products holding up the agreement, it has gone down considerably from its earlier demands.

The issue will be resolved as soon as India gives its nod after suggesting “minor” changes in the Asean’s latest proposal. There would be two more meetings between officials––in February and April this year–– following which the agreement is expected to be formally signed by the two sides.

Speaking to ET, official sources said Asean’s new proposal was more acceptable to India than the previous one as it was more or less in line with what was feasible for the country. As per the new demands, import duties on crude palm oil has to be brought down by India to 43% while that on refined palm oil has to be reduced to 51%. Earlier, the Asean had proposed 30% duty for crude and 40% for refined palm oil.

The Asean has also toned down its demands for pepper, tea and coffee where it has asked for duties to be brought down to 50%, 45% and 45%, respectively. “We may ask for some minor changes in the proposed duties, but the agreement is more or less in place,” an official said. The two sides have also come to a compromise on the end date for implementing tariff cuts for the five products.

While India wanted the end date to be December 2018, the Asean wanted the complete tariff cuts by January 2018. “The two sides have decided on a middle date of July 2018,” the official said.

The FTA will include cut in tariffs for all products except a small negative list of items which will be insulated from tariff cuts. India has 489 items in its negative list, the lowest maintained by the country in any bilateral agreement it has entered into so far.

Indian Prime Minister Manmohan Singh is keen to have the FTA in place as it would serve to consolidate India’s position in South and South-East Asia.