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FTAs not hurting domestic manufacturing: Commerce Ministry |
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New Delhi: Brushing aside concerns of Indian industry over free trade agreements (FTAs), senior commerce ministry officials Monday said it has not led to any spurt in imports or export of raw materials.
A Commerce Ministry's study and analysis on impact of FTAs have found that "the imports have not increased to any level that would create concerns and we have not become suppliers of raw materials. This is good part," the officials said.
However, officials did not provide any concrete data to substantiate their claims on the impact of FTAs on domestic manufacturing.
Imports of intermediate goods have increased which means that India is becoming part of the regional value chain of South Asia, they said adding Indian exporters and industry are not able to exploit these pacts fully.
"The use of these agreements by our exporters are perhaps a matter of concern. But we are making lot of efforts to disseminate informations, " the officials said.
The ministry has drawn up a strategy for the coming six months to accelerate and strengthen outreach programmes which would include workshops.
"We will also try to go down to industrial clusters where potential exporters can understand what are the benefits they have of using the preferential tariff under the FTAs. We want to them about rules of origin, sanitary and phyto-sanitary moves, technical barriers to trade," they said.
The ministry is also in the process of developing a comprehensive portal about FTAs.
"It will tell about different product regime. It will serve the purpose of promoting FTAs and helping exporters to know about tariff and non-tariff and preferential tariff regime in the partner country. That portal is for about 30 countries who are our major trade partners, including FTA partners," they added.
India has so far entered into FTAs with Japan, Singapore, South Korea, Malaysia, Asean and South Asia.
Indian industry and exporters have raised serious concerns about these pacts saying that they are benefiting partner countries more and impacting domestic manufacturing.
Citing few figures, the officials said that out of India's total overall inbound shipments, imports from ASEAN, Singapore, S Korea and Japan at preferential duty rates stood at 14.5 percent, 10.8 percent, 21.8 percent and 22.4 percent respectively.
"This clearly indicates that the preferential imports under FTAs have not contributed to the increase in trade deficits with some countries," they said adding it was difficult to collect data on exports as it have to shared by the FTA partner country.
The Commerce Ministry officials also said that India is losing its price competitiveness in the global market but not because of free trade agreements.
"We did a study about global competitiveness of Indian manufacturing. We found that we are losing competitiveness due to factors such as infrastructural bottlenecks, deficiencies in customs procedures and trade logistics, inadequate communication infrastructure and lack of uniform system of indirect taxes," they said.
India is losing its price competitiveness in some of its traditional strengths like textiles, clothing, leather, automotive components and engineering machinery.
Further allaying concerns of Indian industry, they said that imports of consumer goods too have not increased at higher rates due to these FTAs.
"It has remain stagnant. We have certainly not moved down in the value chain in our exports also. We have also not become a market where consumer goods have dumped under preferential tariff so that could have been a worry but that has not happened," they added.
"One moderating feature is that we have not been able to use these FTAs as they could have been. They are not as widely used as they could be," the officials said.
On complains of the automobile industry on spurt in imports of auto components such as gear boxes, they said that "they are nothing alarming. Auto percentage of imports under different free trade agreements are very low".
About increase in imports of electronic goods, they said that it was because of the Information Technology Agreement (ITA) of the WTO and not because of trade pacts.
India's rationale for entering into FTAs was the diversification and expansion of exports to the partners and region as well ass access to raw materials, intermediate products and capital goods for stimulating value added domestic manufacturing, they said.
"FTAs have adequate safeguard mechanisms to tackle the adverse effect of imports on the domestic industry and take corrective action against import surges," they said.
Source : zeenews.india.com
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