Thursday, July 14 2005 17:58 Hrs (IST) - World Time -

Bangalore: Federation of Indian Chambers of Commerce and Industry (FICCI) today (July 14, 2005) said Indian business could expect greater market access through Free Trade Agreements (FTA)s but it must be ensured that the "rules of origin" and value addition norms are strictly adhered to.

"It is now generally accepted that free trade agreements create more trade" and opens up "sizeable opportunities" for Indian business, an FICCI study on "India and Free Trade Agreements: Issues and Implications", said.

FICCI "generally" supported FTAs but the points of origin clause and value addition norms should be followed as, otherwise, the FTAs might harm the Indian industry rather than help it, the Federation Senior Vice-President Saroj Kumar Poddar said releasing the study to reporters in Bangalore.

"Rules of Origin" are the criteria to determine the country of origin of products.

South Asian Free Trade Area (SAFTA) had opened up combined market with $750 billion strong GDP and 1.4 billion population.

Likewise, it said, the Bangkok Agreement had created a market of over 2.5 billion people, Bay of Bengal Initiative for Multi-Sectorial Technical and Economic Cooperation (BIMSTEC) had a combined GDP of about $800 billion and the Indian-ASEAN FTA is aimed at raising the merchandise trade turnover to $30 billion by 2007.

As many as 12 FTAs/PTAs were also currently under various stages of consideration, including with Gulf Cooperation Council, China, South Korea, Japan, Malaysia, Pakistan, Egypt, Israel, Russia and Australia.

"If properly handled FTAs can be beneficial but if the rules of origin are not adhered to, it could be a lose-lose proposition", FICCI said.

Again on the "downside" of the India-Thailand FTA, several industry sectors in India were under serious pressure and the "general perception" is that there would be a surge of imports from Thailand, the study said.

India's imports from Thailand of 82 "early harvest products" rose by 82 per cent in the September 2004-January 2005 period, it said. While for some products the increase has been significant, it is too early to rush to a definite conclusion about any "surge" in Thai imports into India.

Citing findings of an FICCI survey on India-Thailand FTA, it said internal cost disabilities were eroding competitiveness of several Indian industries vis-a-vis Thai imports.

On the Comprehensive Economic Cooperation Agreement (CECA) with Singapore, the study said major gains would be that India would gain market access in Singapore for sectors like business, including professional services, education services, distribution services, transportation services, environmental services and construction and related engineering services.

But pointing out the challenges, it said 75 per cent of Singapore's exports would now enjoy either zero or substantially reduced duty in the Indian market. Since 45 per cent of Singapore's global exports come from "re-exports", general industry feeling is that threat of deflection is there, the study said.