Low use of Asean FTA under review; aim is to eliminate barriers
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NEW DELHI: The government is examining the causes for the low utilisation of India's free trade agreement (FTA) with the Association of Southeast Asian Nations (Asean) bloc, particularly Thailand The commerce and industry ministry has assessed that the utilisation of the preferential route under the Asean-India Trade in Goods Agreement ( AITIGA ) for the export of many goods, including chemicals and plastics, to Thailand is below 50%. The AITIGA was signed in 2009 and came into effect in 2010."The AITIGA offers lower preferential tariff rates compared to the tariffs levied by Thailand. We have asked industry why the utilisation of this preferential route for many exports is below 50%," said an official.Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam are Asean members. Five countries-Indonesia, Singapore, Malaysia, Thailand and Vietnam-account for 92.7% of India's exports to and 97.4% imports from Asean.As per the analysis, Thailand imposes most-favoured nation (MFN) duty of 3-30% on certain plastics and chemicals whereas these products can go duty-free under the AITIGA.At present, the AITIGA is being reviewed as India seeks to eliminate barriers and misuse of the trade pact. Concerns have also been raised about routing of goods from third countries in India through Asean members by taking the duty advantages of the agreement.Under the pact, the two sides agreed to progressively eliminate duties on about 75% of goods and reduce tariffs on around 15% goods but the 10 Asean countries made different tariff elimination commitments.
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