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Commerce department to seek Cabinet approval for expanding PTA with Chile |
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NEWD ELHI: The commerce department will soon seek Cabinet approval for expanding its preferential trade agreement (PTA) with Chile, a move aimed at removing the imbalance in trade between the two nations. "We will approach the Cabinet next month. Since there is little bit of tightening of 'rules of origin' from our side, it took time to expand it," a commerce department official told ET.
Rules of origin are the criteria that determine the country of source for products. They determine how much concession an exporter will get.
The need for stricter 'rules of origin' arose because despite India having a PTA with Chile since 2007, bilateral trade has been skewed in favour of Chile, with India's imports from the country rising faster than its exports to the nation. The government now needs the Cabinet's nod to reopen and expand the trade pact.
India's exports to Chile rose 11% from $507.55 million in 2010-11 to $565.82 million in 2014-15, whereas imports from the country doubled over the same period to $3.08 billion from $1.55 billion.
India mostly imports metals such as copper from Chile, but with the government becoming strict with the rules of origin, it will become difficult for the South American nation to export those products that are made in neighboring countries, like Peru—this is often cited as the cause of the tilt of trade balance in Chile's favour. The PTA, in its current form, seeks to cut tariffs between 10-50% on 296 Indian products exported to Chile and 266 Chilean products imported by India.
The agreement benefitted 91% of Indian exports and 98% of imports from Chile. The Indian sectors that benefitted from the PTA include cars, textiles, chemicals, pharma, engineering and agricultural machinery.
Among the Chilean products that benefitted from the PTA are copper, cellulose, newsprint, iodine, fish meal, wood boards and planks and salmon. In the expansion of the PTA, there will be further reduction in tariffs for some products and some new products will be added in the list.
The official quoted earlier said expanding the PTA with Chile is only a step towards tapping the Latin American market, because the ministry is waiting for the Joint Study Group's report on trade with Peru to take a call on the framework for a trade agreement. India and Peru have set up a Joint Study Group to explore the possibility of a trade pact as Peru has emerged as India's sixth largest trading partner in the LAC region.
Source : economictimes.indiatimes.com
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