India FTAs with Japan, Malaysia to come into effect soon: Khullar

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Namrata Kath Hazarika | 22 Feb, 2011
The India-Japan Comprehensive Economic Partnership Agreement (CEPA), which was inked on February 16 in Tokyo to remove tariffs on 94% of goods over 10 years will come into effect from April 1, said Commerce Minister, Rahul Khullar in New Delhi on Monday.

Speaking during a FICCI's interactive meet with the industry stalwarts, he said, "The agreement is most comprehensive of all the agreements concluded by India so far as it covers more than 90 percent of the trade, a vast gamut of services, investment, IPRs, customs and other trade related issues."

The major gains from CEPA will be reduction by 17.41 percent of all tariff lines which would go to zero duty immediately. Most of these are in the textiles sector (1800 lines in 8 digit), where India will benefit immensely by the immediate total bilateral elimination of duties in this sector.

However Japan will immediately place 87 percent lines under zero duty. The major items of India's export includes seafoods, spices, fruits such as mangoes, lemons, spirits and most textile products, chemicals, etc.

In fact, most auto parts and agricultural and other sensitive items have been kept out of the liberalization schedule. India’s exclusion list covers 12.84% of all tariff lines and 9.9% of volume of trade.

While, a similar agreement with Malaysia - The India-Malaysia Comprehensive Economic Co-operation Agreement (CECA), which was signed on February 18 in Kuala Lumpur is expected to be effective by July 1, 2011 that aims to protect, promote and remove barriers to investment flows.

In the context of the CEPA with Malaysia, Khullar explained that tariff elimination/reduction has been fast-tracked by 3-6 months. Describing the agreement as 'ASEAN Plus,' he said 76 India items and 140 Malaysia items will have more liberal commitments.

The agreement grants market access for India’s basmati rice, mangoes, eggs, trucks, motorcycles and cotton garments and Malaysia is to get access for fruits, cocoa, palm oil products and synthetic textiles. There is adequate protection for agriculture, auto, textile sectors under the agreement, he said.

To prevent any serious injury to the domestic industry, a safeguard mechanism included in the CECA to guard against any sudden surge in imports from Malaysia as a result of tariff cuts, he mentioned.

However, it was also announced by the Commerce Minister that a team of officials are scheduled to travel across the country to discuss and suggest measures related to the recently signed agreement between India, Japan and Malaysia.

"... My colleagues will make a team and go out... all over the country to explain the provisions of the tariff concessions and services agreement that have been entered into so that everybody on a pan-India basis gets to know exactly what there is and what is the gain," Khullar added.