India Seeks New Trade Pacts To Boost Exports.

India may soon start trade talks with Indonesia, Australia and the Common Market for Eastern and Southern Africa (Comesa) bloc to open new avenues for exporters as Europe and the US take longer than expected to recover from an economic slowdown.

The trade and economic relations committee (TERC) is expected to give its nod to trade talks with these nations in a meeting on 29 April, said a commerce ministry official who did not want to be named.

Prime Minister Manmohan Singh heads TERC, whose approval is necessary to start trade talks with any country or bloc.

The World Trade Organization has projected growth in global trade to slow to 6.5% in 2011 from 14.5% in the previous year.

Comesa will allow India an entry into the African market, said Biswajit Dhar, head of the New Delhi-based think-tank Research and Information System for Developing Countries.

The second Africa-India Forum Summit, which aims to boost trade ties between India and the continent, will be held in Ethiopia in May.

Dhar said Indonesia is the most dynamic South-East Asian economy and both countries would gain through a trade agreement.

Indonesia will push for market access in agriculture, said another trade expert on condition of anonymity.“There is a question mark as to how far India could accommodate its demands.”

India’s foreign ministry was initially unwilling to give the go-ahead for trade talks with Australia because of concerns about the security of Indian students there and Australia’s reluctance to supply uranium to India as a clean source of energy.

But the proposal gained momentum with the preparations for Prime Minister Singh’s scheduled visit to Australia in October for a meeting of the Commonwealth heads of government.

Bilateral relations between the two countries became strained after a number of allegedly racial attacks on Indian students living in Australia. The country has also ruled out supplying uranium to India until New Delhi signs the Nuclear Non-Proliferation Treaty.

Officials in the commerce ministry said a free-trade agreement (FTA) with Australia will give India access to markets in East Asia, allowing it to counterbalance the growth of strategic and economic rivals such as China in the region.

China is negotiating a comprehensive FTA with Australia. If signed, the agreement will give Chinese firms an edge over Indian companies in the Australian market.

India’s exports to Australia in 2009-10 totalled $1.4 billion, while imports were worth $12.4 billion—creating a deficit of about $11 billion.

While a joint study group set up by India and Indonesia had strongly favoured a comprehensive bilateral trade agreement in September 2009, Indonesia was reluctant initially due to economic slowdown and differences within the country over the move. However, with the economy regaining growth momentum, the proposal was revived and finalized during the visit of Indonesian President Susilo Bambang Yudhoyono to New Delhi in January. Yudhoyono was the chief guest for the 26 January Republic Day parade.

The study group had estimated that India’s exports to Indonesia could reach $7.8 billion by 2020 and imports could touch $9.7 billion. Total trade between India and Indonesia stood at $11.7 billion in 2009-10, growing 27% from a year earlier.

Comesa is a free trade area including 19 states in eastern and southern Africa. India’s major export destinations in the bloc include Kenya, Egypt, Sudan, Mauritius, Djibouti, Ethiopia and Libya.

The Comesa region accounted for 38.2% of India’s total exports to Africa in 2009-2010, while 13% of India’s imports from Africa were from the region, according to the Comesa website.

India’s total trade with the Comesa region rose more than three-fold between 2004-05 and 2009-2010, amounting to $5.1 billion. The country’s import from the region totalled $3.3 billion in 2009.

Source : livemint.com