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India's Free Trade Agreements (FTAs) with major partners such as Japan, Malaysia, South Korea and the Asean bloc have not widened trade deficit or increased export of raw materials from the country, according to initial findings of a Government study.
However, Indian exporters, too, have not been able to use the trade pacts to their full potential because of low awareness. The Government is now making efforts to disseminate information more widely.
“Though preferential imports have been increasing from the period 2009-2010 to 2013-14, they are still not significant, ranging from 3.4 per cent of total imports under FTA with Malaysia to 22.4 per cent of total imports under India-Japan FTA,” according to an official release by the Commerce Ministry.
Preferential imports are low compared to total imports from FTA partner countries because sellers find it difficult to meet the tough Rules of Origin (ROO) norms under the FTAs stipulating high value addition requirements.
No impact “Since preferential imports have been low from FTA partner countries, there is no question of these affecting our domestic market or widening the trade deficit,” a Commerce Ministry official said in an informal interaction with the media.
The FTAs have also not resulted in any increase in consumer goods imports and only an “insignificant”' rise in automotives imports, the Commerce Ministry study said.
On the other hand, imports of intermediate goods have increased which means that India is becoming part of the regional value chain of South Asia.
The Commerce Ministry, however, doesn’t have data on exports through the preferential route as the Customs department does not track these numbers. “We are talking to our partner countries and trying to assimilate data,” the official added.
Matter of concern Overall export data of items covered under the FTAs show that there has been no increase in shipments of raw-material from the country, the study added.
It also shows that exporters are not exploiting the FTAs to their advantage.
“The use of these agreements by our exporters is a matter of concern. But we are making a lot of efforts to disseminate information by strengthening our outreach programme and making details on such pacts available on our website,” the official said.
The ministry is also in the process of developing a comprehensive portal about FTAs.
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