Commerce department seeks Cabinet nod to expand Asia-Pacific Trade Pact.

NEW DELHI: The commerce department has sought cabinet approval to expand the Asia Pacific Trade Agreement (APTA), focusing on areas that will encourage domestic manufacturing as part of the Make in India initiative. As part of the exercise, India is focussing on importing raw materials and intermediaries from APTA member countries and, in return, giving higher tariff concessions on more products.

The increased import of raw materials, intermediaries and components such as machine tools, chemicals and plastics will reduce costs and improve competitiveness of domestic industry. "The expansion has been done with Make in India as an objective," said one official.

This comes as various multilateral agencies have said that Asian economies are growing faster than their western counterparts. "We are waiting for the cabinet to give a date to consider the APTA expansion," said an official aware of the development, adding that the process had taken time since there were concerns related to China.

The government has been seeking the inclusion of domestic manufacturing and employment generation in India's trade agreement negotiations and, if approved by cabinet, APTA will be the first pact to take these into consideration. APTA covers Bangladesh, China, India, Laos, South Korea, Sri Lanka and Mongolia.

India has proposed duty concessions on almost 3,000 products, a sharp rise from 570 now. Duty concessions have been increased by a margin of preference of 33%, implying that duties on each of the products will be reduced by a third for the importing countries. Until now, India has been giving concessions that are 23.9% lower than the customs duty of respective products under APTA.

"The import of raw material such as minerals, industrial goods and electronics will make the domestic market competitive. Since most significant economies of the world such as India, China and Korea are present in the agreement, its membership should be expanded to central Asia as well especially because Mongolia has also joined in," said Ram Upendra Das, professor at Research and Information System for Developing Countries.

According to Das, India's exports to APTA were $28 billion in FY14 while imports from the bloc were $61billion.

APTA is the only operational trade agreement linking India and China, two of the fastest-growing markets in the world. The two countries are separately negotiating the Regional Comprehensive Economic Partnership (RCEP) agreement with 14 others.

Source : economictimes.indiatimes.com