A

Project

On

In Partial Fulfillment of Paper “Business Environment”

For

BBS -5th Semester

Deen Dayal Upadhyaya College

University of Delhi

Submitted To:

Ms. Deepa Kamra

Department of Business Studies

Deen Dayal Upadhyaya College

Submitted By:

Keshav Jha 07/BBS/7023

Neeraj Bharti 07/BBS/7015

Pankul Gupta 07/BBS/7038

Ankit Saxena 07/BBS/7019

BBS 5th Semester

November, 2009

Declaration

We hereby declare that this project on “India’s foreign trade policy” is solely made by

us. We were completely involved from the initial stage to the final stage. Obviously, our

well wishers had always supported & guided us and have impacted our thinking but we

made this project on the basis of our knowledge and skill.

_______________ ________________

Ankit Saxena Neeraj Bharti

_________ _________

Keshav Jha Panku Gupta

Acknowledgment

We acknowledge the contribution of our mentor Mr. Rakesh Kumar who have an

important impact on our thinking. We are indebted to him for his guidance and

suggestion in the initial stages of our project. We owe a great deal to library staff for

providing generous support for our research and preparation of our project. We also

want to thank our colleagues and associates of Bachelor of Business Studies for their

continuous support.

We have benefited immensely from our interactions with various corporate people and

we acknowledge their contribution to my learning. And even after such support if you

finds any mistake in the project, then we are extremely sorry for that and will try to be

perfect next time.

FOREIGN TRADE POLICY OF INDIA

PREAMBLE

CONTEXT

For India to become a major player in world trade, an all encompassing, and comprehensive view needs to be taken for the overall development of the country’s foreign trade. While increase in exports is of vital importance, we have also to facilitate those imports which are required to stimulate our economy. Coherence and consistency among trade and other economic policies is important for maximizing the contribution of such policies to development. Thus, while incorporating the existing practice of enunciating an annual EXIM Policy, it is necessary to go much beyond and take an integrated approach to the developmental requirements of India’s foreign trade. This is the context of the new Foreign Trade Policy.

OBJECTIVES

Trade is not an end in itself, but a means to economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. The Foreign Trade is built around two major objectives. These are:

1. To double our percentage share of global merchandise trade within the next five years; and

2. To act as an effective instrument of economic growth by giving a thrust to employment generation.

STRATEGY

These objectives are proposed to be achieved by adopting, among others, the following strategies:

1. Unshackling of controls and creating an atmosphere of trust and transparency to unleash the innate entrepreneurship of our businessmen, industrialists and traders.

2. Simplifying procedures and bringing down transaction costs.

3. Neutralizing incidence of all levies and duties on inputs used in export products, based on the fundamental principle that duties and levies should not be exported.

4. Facilitating development of India as a global hub for manufacturing, trading and services.

And many more

5. Identifying and nurturing special focus areas which would generate additional employment opportunities, particularly in semi-urban and rural areas, and developing a series of ‘Initiatives’ for each of these.

6. Facilitating technological and infrastructural upgradation of all the sectors of the Indian economy, especially through import of capital goods and equipment, thereby increasing value addition and productivity, while attaining internationally accepted standards of quality.

7. Avoiding inverted duty structures and ensuring that our domestic sectors are not disadvantaged in the Free Trade Agreements/Regional Trade Agreements/Preferential Trade Agreements that we enter into in order to enhance our exports.

8. Upgrading our infrastructural network, both physical and virtual, related to the entire Foreign Trade chain, to international standards.

9. Revitalising the Board of Trade by redefining its role, giving it due recognition and inducting experts on Trade Policy.

10. Activating our Embassies as key players in our export strategy and linking our Commercial Wings abroad through an electronic platform for real time trade intelligence and enquiry dissemination.

PARTNERSHIP:

The new Policy envisages merchant exporters and manufacturer exporters, business and industry as partners of Government in the achievement of its stated objectives and goals. The dynamics of a liberalized trading system sometimes results in injury caused to domestic industry on account of dumping. When this happens, effective measures to redress such injury will be taken.

ROADMAP:

This Policy is essentially a roadmap for the development of India’s foreign trade. It contains the basic principles and points the direction in which we propose to go. By virtue of its very dynamics, a trade policy cannot be fully comprehensive in all its details. It would naturally require modification from time to time. We propose to do this through continuous updating, based on the inevitable changing dynamics of international trade. It is in partnership with business and industry that we propose to erect milestones on this roadmap.

 

HIGHLIGHTS OF INDIA’S TRADE POLICY

I- Special Economic Zones (SEZs)Offshore Banking Units (OBUs) shall be permitted in SEZs. Detailed guidelines are being worked out by RBI. This should help some of our cities emerge as financial nerve centres of Asia.Units in SEZ would be permitted to undertake hedging of commodity price risks, provided such transactions are undertaken by the units on stand-alone basis. This will impart security to the returns of the unit.It has also been decided to permit External Commercial Borrowings (ECBs) for a tenure of less than three years in SEZs. The detailed guidelines will be worked out by RBI. This will provide opportunities for accessing working capital loan for these units at internationally competitive rates.

II- Employment oriented AgricultureExport restrictions like registration and packaging requirement are being removed today on Butter, Wheat and Wheat products, Coarse Grains, Groundnut Oil and Cashew to Russia . Quantitative and packaging restrictions on wheat and its products, Butter, Pulses, grain and flour of Barley, Maize, Bajra, Ragi and Jowar have already been removed on 5th March, 2002. Restrictions on export of all cultivated (other than wild) varieties of seed, except Jute and Onion, removed.To promote export of agro and agro based products, 20 Agri export zones have been notified. In order to promote diversification of agriculture, transport subsidy shall be available for export of fruits, vegetables, floriculture, poultry and dairy products. The details shall be worked out in three months.3% special DEPB rate for primary & processed foods exported in retail packaging of 1 kg or less.

Cottage Sector and Handicrafts

(i) An amount of Rs. 5 crore under Market Access Initiative (MAI) has been earmarked for promoting cottage sector exports coming under the KVIC.

(ii) The units in the handicrafts sector can also access funds from MAI scheme for development of website for virtual exhibition of their product.

(iii) Under the Export Promotion Capital Goods (EPCG) scheme, these units will not be

required to maintain average level of exports, while calculating the Export Obligation.

(iv) These units shall be entitled to the benefit of Export House status on achieving lower average export performance of Rs.5 crore as against Rs. 15 crore for others; and

(v) The units in handicraft sector shall be entitled to duty free imports of an enlarged list of items as embellishments upto 3% of FOB value of their exports.

Small Scale Industry With a view to encouraging further development of centres of economic and export excellence such as Tirupur for hosiery, woollen blanket in Panipat, woollen knitwear in Ludhiana, following benefits shall be available to small scale sector:

i. Common service providers in these areas shall be entitled for facility of EPCG scheme.

ii. The recognised associations of units in these areas will be able to access the funds under the Market Access Initiative scheme for creating focused technological services and marketing abroad.

iii. Such areas will receive priority for assistance for identified critical infrastructure gaps from the scheme on Central Assistance to States

iv. Entitlement for Export House status at Rs. 5 crore instead of Rs. 15 crore for others.

LeatherDuty free imports of trimmings and embellishments upto 3% of the FOB value hitherto confined to leather garments extended to all leather products.Textiles

i. Sample fabrics permitted duty free within the 3% limit for trimmings and embellishments.

ii. 10% variation in GSM be allowed for fabrics under Advance Licence.

iii. Additional items such as zip fasteners, inlay cards, eyelets, rivets, eyes, toggles, velcro tape, cord and cord stopper included in input output norms.

iv. Duty Entitlement Passbook (DEPB) rates for all kinds of blended fabrics permitted. Such blended fabrics to have the lowest rate as applicable to different constituent fabrics.

Gem & Jewellery

i. Customs duty on import of rough diamonds is being reduced to 0%. Import of rough diamonds is already freely allowed. Licensing regime for rough diamond is being

abolished. This should help the country emerge as a major international centre for diamonds.

ii. Value addition norms for export of plain jewellery reduced from 10% to 7%. Export of all mechanised unstudded jewellery allowed at a value addition of 3 % only. Having already achieved leadership position in diamonds, now efforts will be made for achieving quantum jump on jewellery exports as well.

iii. Personal carriage of jewellery allowed through Hyderabad and Jaipur airport as well.

(III) Technology oriented

(a) Electronic hardwareThe Electronic Hardware Technology Park (EHTP) scheme is being modified to enable the sector to face the zero duty regime under ITA(Information Technology Agreement)-1. The units shall be entitled to following facility:

Net Foreign Exchange as a Percentage of Exports (NFEP) positive in 5 years.

No other export obligation for units in EHTP.

Supplies of ITA I items having zero duty in the domestic market to be eligible for counting of export obligation.

(b) Chemicals and PharmaceuticalsAll pesticides formulations to have 65% of DEPB rate of such pesticides.Free export of samples without any limit.Reimbursement of 50% of registration fees for registration of drugs. (c) Projects Free import of equipment and other goods used abroad for more than one year.

SPECIAL SCHEMES IN TRADE POLICY

Export clusters

a. Upgradation of infrastructure in existing clusters/industrial locations under the Department of Industrial Policy & Promotion (DIPP) scheme to increase overall competitiveness of the export clusters.

b. Supplemental efforts to be made under the ASIDE scheme and similar schemes of other Ministries to bridge technology and productivity gaps in identified clusters.

c. 10 such clusters with high growth potential to be reinvigorated based on a participatory approach.

Rehabilitation of sick units

For revival of sick units, extension of export obligation period to be allowed to such units based on BIFR rehabilitation schemes. This facility shall also be available to units outside the purview of BIFR but operating under the State rehabilitation programme.

Removal of Quantitative Restrictions

a. Import of 69 items covering animal products, vegetables and spices, antibiotics and films removed from restricted list.

b. Export of 5 items namely paddy except basmati, cotton linters, rare earth, silk cocoons, family planning devices except condoms removed from restricted list.

Special economic zones scheme

a. Sales from Domestic Tariff Area (DTA) to SEZs to be treated as export. This would now entitle domestic suppliers to Drawback/ DEPB benefits, CST exemption and Service Tax exemption.

b. Agriculture/Horticulture processing SEZ units will now be allowed to provide inputs and equipments to contract farmers in DTA to promote production of goods as per the requirement of importing countries. This is expected to integrate the production and processing and help in promoting SEZs specialising in agro exports.

c. Foreign bound passengers will now be allowed to take goods from SEZs to promote trade, tourism and exports.

d. Domestic sales by SEZ units will now be exempt from SAD.

e. Restriction of one year period for remittance of export proceeds removed for SEZ units.

f. Netting of export permitted for SEZ unit provided it is between same exporter and importer over a period of 12 months.

g. SEZ units permitted to take jobwork abroad and exports goods from there only.

h. SEZ units can capitalise import payables.

i. Wastage for subcontracting/exchange by gem and jewellery units in transactions between SEZ and DTA will now be allowed.

j. Export/import of all products through post parcel/courier by SEZ units will now be allowed.

k. The value of capital goods imported by SEZ units will now be amortised uniformly over 10 years.

l. SEZ units will now be allowed to sell all products including gems and jewellery through exhibitions and duty free shops or shops set up abroad

m. Goods required for operation and maintenance of SEZ units will now be allowed duty free.

EOU Scheme

a. Agriculture/Horticulture processing EOUs will now be allowed to provide inputs and equipments to contract farmers in DTA to promote production of goods as per the requirement of importing countries. This is expected to integrate the production and processing and help in promoting agro exports.

b. EOUs are now required to be only net positive foreign exchange earner and there will now be no export performance requirement.

c. Foreign bound passengers will now be allowed to take goods from EOUs to promote trade, tourism and exports.

d. The value of capital goods imported by EOUs will now be amortized uniformly over 10 years.

e. Period of utilisation of raw materials prescribed for EOUs increased from 1 year to 3 years.

f. Gems and jewellery EOUs are now being permitted sub-contracting in DTA.

g. Wastage for subcontracting/exchange by gem and jewellery units in transactions between EOUs and DTA will now be allowed as per norms.

h. Export/import of all products through post parcel/courier by EOUs will now be allowed.

i. EOUs will now be allowed to sell all products including gems and jewellery through exhibitions and duty free shops or shops set up abroad

j. Gems and jewellery EOUs will now be entitled to advance domestic sales.

EPCG scheme

a. The scheme shall now allow import of capital goods for pre-production and post-production facilities also.

b. The Export Obligation under the scheme shall now be linked to the duty saved and shall be 8 times the duty saved.

c. To facilitate upgradation of existing plant and machinery, import of spares shall also be allowed under the scheme.

d. To promote higher value addition in exports, the existing condition of imposing an additional Export Obligation of 50% for products in the higher product chain to be done away with.

e. Greater flexibility for fulfillment of export obligation under the scheme by allowing export of any other product manufactured by the exporter. This shall take care of the dynamics of international market.

f. Capital goods upto 10 years old shall also be allowed under the scheme.

g. To facilitate diversification into the software sector, existing manufacturer exporters will be allowed to fulfill export obligation arising out of import of capital goods under the scheme for setting up of software units through export of manufactured goods of the same company.

h. Royalty payments received from abroad and testing charges received in free foreign exchange to be counted for discharge of export obligation under EPCG scheme.

DEPB Scheme

a. Facility for provisional DEPB rate introduced to encourage diversification and promote export of new products.

b. DEPB rates rationalised in line with general reduction in Customs duty.

Advance Licence

a. Standard Input Output Norms for 403 new products notified.

b. Anti-dumping and safeguard duty exemption to advance licence for deemed exports for supplies to EOU/SEZ/EHTP/STP.

DFRC Scheme

a. Duty Free Replenishment Certificate scheme extended to deemed exports to provide a boost to domestic manufacturer.

b. Value addition under DFRC scheme reduced from 33% to 25%.

Reduction of Transaction Cost

a. High priority being accorded to the EDI implementation programme covering all major community partners in order to minimise transaction cost, time and discretion. We are now gearing ourselves to provide on line approvals to exporters where exports have been effected from 23 EDI ports.

b. Online issuance of Importer-Exporter Code(IEC) number by linking the DGFT EDI network with the Income Tax PAN database is under progress.

c. Applications filed electronically (through website www.nic.in/eximpol) shall have a 50% lower processing fee as compared to manual applications.

Miscellaneous

a. Actual user condition for import of second hand capital goods upto 10 years old dispensed with.

b. Reduction in penal interest rate from 24% to 15% for all old cases of default under Exim Policy.

c. Restriction on export of warranty spares removed.

d. IEC holder to furnish online return of imports/exports made on yearly basis.

e. Export of free of cost goods for export promotion @ 2% of average annual exports in preceding three years subject to ceiling of Rs.5 lakh permitted

India's Trade with Different Countries/Alliances

India's total external trade (exports plus imports including re-exports) in the year 1950-51 stood at Rs. 1214 crore. Since then, this has witnessed continuous increase with occasional downturns. During 2007-08 the value of India’s external trade reached Rs. 1605022 crore.

India's exports of merchandise goods touched the target of US$159 billion in 2007-08 recording a growth of around 26% in dollar terms. India’s growth of exports is much higher than that of the world economy as well as many major economies of the world.

At the same time, imports increased from Rs. 840506 crore in 2006-2007 to Rs. 964850 crore during 2007-2008 thereby registering a growth of 29% in rupee terms. The trade deficit in 2007-08 was increased to Rs. (-) 324678 crore as against Rs. (-) 268727 crore during 2006-07.

In dollar terms, Asia & Asean accounted for 51.54 per cent of India’s total exports, followed by Europe (22.99%) and America (17.04%). India’s imports were highest from Asia & Asean (62.52%) followed by Europe (19.97%) and America (9.05%), during the same period.

(P) Provisional Figures

Direction of India's Trade

Region

Exports Imports

April-March April-March

2006-07 2007-08(P) 2006-07 2007-08(P)

1. Europe 130639 147182 181525 192641

1.1 EU countries 27) 121296 136113 134990 139555

1.2 Other WE countries 8979 10642 46265 52942

1.2 East Europe 364 427 269 144

2. Africa 38062 44922 51519 60151

3. America 109706 109094 88843 87336

4. Asia and ASEAN 285092 329952 497327 603196

5. CIS & Baltics 6688 6996 17481 15240

6. Unspecified Region 1593 2027 3812 6286

India-Europe Trade

Europeans countries account for about 22.5 per cent of India's total trade while India's exports to Europe during 2006-07 were US$ 28.87 billion. During this year, bilateral trade increased by 26 per cent over 2005-06. While India's export to Europe recorded a growth of 17 per cent, India's import from Europe grew by 33 per cent. The top five items of India's exports to Europe are ready-made garments including accessories, gems & jewellery, machinery & instruments, petroleum (crude & products) and transport equipment. The top five items of India's imports from Europe are machinery (except electrical & electronics), pearls/precious, semi-previous stones, electronic goods, transport equipments and iron & steel.

Trade and Investment relations with European Union

The European Union (EU) presently consists of 27 countries. These countries are Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, UK, Bulgaria and Romania.

India and EU enjoy healthy economic relations. These relations have been built on the foundation of

1. India-EU Corporation Agreement on Partnership and Development which came into effect in August, 1994

2. India-EU Strategic Partnership which was announced in September, 2005.

India also has bilateral economic Agreements with a number of individual EU countries in the areas of trade, investments and avoidance of double taxation. India has agreements for investments and promotions/protections with 22 countries of Europe, including 17 countries of EU. Similarly, agreements for avoidance of double taxation exist with 26 countries in EU.

India-EU bilateral relations are reviewed at the official level by the India-EC Joint Commission. This had its last meeting in July 2008. Three Sub-Commissions on Trade, Economic Cooperation and Development Cooperation and nine Joint Working Groups on agriculture and marine products, textiles, information technology & communications, consular matters, environment, steel, food processing industries, pharmaceuticals & bio-technology and technical barriers to trade (TBT)/sanitary and photo sanitary (SPS) issues are functioning and their reports are considered by Joint Commission.

India-Africa Trade

There are more than 50 countries in the Sub-Saharan Africa (SSA) regional. In spite of various constraints such as distance, language barriers, lack of information etc. India's trade with the region has grown rapidly. The trade between India and SSA region has grown from US$ 7572.65 million in 2004-05 to US$ 197,053.37 million in 2007-08 registering a growth of 32.34%.

India's exports to the region have increased by 30.85% from US$ 4218.23 million in 2004-05 to US$ 83,535.94 million in 2007-08 and the imports form the region have increased by 42.70% from US$ 3354.42 million in 2004-05 to US$ 111,517.43 million in 2007-08.

India's Trade with Different Countries/Alliances

Major items of exports:

Cotton yarn, fabrics made ups etc.

drugs, pharmaceuticals and fine chemicals

manufactures of Metals

Machinery and Instruments

Man made Yarn, Fabrics Made ups

Transport equipment

Primary and Semi finished iron and steel

RMG cotton including accessories

Plastic and linoleum products

Inorganic/organic/agro chemicals.

Major Items of imports:

Gold,

Cashew Nuts

Inorganic Chemicals,

Wood & Wood Products,

Metalifers ors & Metal Scrap,

Iron & Steel,

Cotton raw. Comb/uncombed/waste,

Coal, coke & Briquettes etc.

Pulp and waste paper,

Non ferrous metals,

Organic chemicals,

Machinery except elect. & electronic,

Fertilizer crude,

Electronic goods,

Pearls precious semiprecious stones.

Focus Africa Programme

In order to enhance the bilateral trade between India and African countries, the "Focus: Africa" Programme was launched by Minister for Commerce & Industry on 31st March 2002. Initially focus was on seven African countries viz. Ghana, Nigeria South Africa, Tanzania, Kenya, Ethiopia and Mauritius. In view of the enthusiasm generated by this programme in its first year, the Government expanded the programme to cover the entire continent of Africa including six North African countries during the year 2003-04. The Focus Africa programme is continuing for the fifth year during 2006-07.

Preferential Trade Agreement (PTA) with SACU

South Africa, Lesotho, Swaziland, Botswana and Namibia have formed the South Africa Customs Union (SACU) with a common Custom Tariff Policy. A Joint Working Group (JWG) consisting of Government representatives from both sides was set up to examine the proposal to prepare a draft.

Frame Work Treaty for the Preferential Trade Agreement (PTA) between India and SACU countries. In a meeting of JWG held in Namibia on 6th-7th September 2004, the draft Framework Agreement was finalized. In the sixth session of the India-South Africa Joint Ministerial Commission Meeting held in New Delhi on 5-6 Dec. 2005, both sides agreed that a comprehensive Free Trade Agreement within a reasonable time, and in the interim, a limited scope agreement providing for exchange of tariff concession on select list of products between India and SACU, would give further impetus to bilateral trade. India and Southern African Custom Union (SACU) commenced negotiations for Preferential Trade Agreement (PTA) at Pretoria, South Africa on 5th-6th October, 2007. The 2nd round for PTA with SACU was held at Walvis Bay, Namibia on 21st-22nd February, 2008.

CECPA with Mauritius

During the visit of PM of India to Mauritius from March 30-April 2, 2005 both the countries agreed for a Comprehensive Economic Cooperation and Partnership Agreement (CECPA) to boost bilateral trade, investment and general economic cooperation. Seven Rounds of talks on CECPA have been held so far. The 7th round of talks was recently held in New Delhi on the 7th July 2006.

During the visit of the Prime Minister of Mauritius to India in October 2005 the following bilateral agreements/MoUs were signed between two countries:

1. Mutual Legal Assistance Treaty in Criminal Matters;

2. Agreement on the Transfer of Sentenced Persons;

3. MoU for cooperation in the field of Hydrography;

4. MoU for Harmonisation of Standards between concerned agencies;

5. MoU for Cooperation on Consumer Protection and Legal Metrology;

6. MoU between Indian Institute of Public Administration (IIPA) and Government of Mauritius;

7. MoU on Preferential Trade Agreement.

Joint Trade Committee (JTC) meeting with Ethiopia

The Joint Trade Committee (JTC) meting is an institutional arrangement under the aegis of Trade Agreement to review the implementation of Trade Agreement and to identify bottlenecks is promoting trade between the countries. The 4th JTC meeting with Ethiopia was held on 5th June 2006 at New Delhi. Sh. Jairam Ramesh, Hon'ble Minister of State for Commerce, Govt. of India and the H.E. Mr Ahmed Tusa, State Minister of Trade and Industry, Govt. of Ethiopia co-chaired this JTC meeting.

Free Trade Agreement (FTA)

Free Trade Agreement (FTA)

Free trade agreements (FTAs) are generally made between two countries. Many governments, throughout the world have either signed FTA, or are negotiating or contemplating new bilateral free trade and investment agreements. FTA signed » INDO-THAILAND (9 October, 2003) » INDO-SRILANKA (28 December, 1998)

FTA by 2011 » Brunei » Indonesia » Malaysia

FTA by 2016 » Philippines » Cambodia » Laos » Myanmar » Vietnam

FTA Ongoing » China » Singapore

Note : At the third Asean-India summit, the prime minister, Dr. Manmohan Singh came out with a bold vision of an Asian economic community which will include ASEAN, China, Japan, Korea and India.

Indo-Thailand

India and Thailand signed FTA on October 09, 2003 with four other accords for enhancing cooperation in agriculture, tourism and science.Both the countries signed MoU on agricultural cooperation, MoU on tourism cooperation, agreement on visa exemption for diplomatic and official passport holders and programme of cooperation in biotechnology. The agreements were signed in the presence of the then Prime Minister Atal Bihari Vajpayee and the Thai counterpart Thaksin Shinawatara, in Bangkok. It also contains a provision regarding emergency measures to protect domestic producers in case of sudden surges in imports.

Agricultural co operations MoU provides joint activities between the two states, covering agricultural and forestry research, biotechnology soil and water conservation, watershed management, land use planning and horticulture. The agreement will be valid for five years from the date of signing (as mentioned then). The agreement on tourism through reciprocal establishment of representative offices of the tourism department of the India as well as Thailand.

The fifth agreement upon biotechnology envisages the establishment of an India-Thailand biotechnology panel for

Formulation,

Approval

Monitoring

Review of action plans.

Indo-Sri Lanka

Agreement Overview of Indo-Lanka Free Trade Agreement Milestones

28 December 1998 - Signing of the Free Trade Agreement in New Delhi by the Prime Minister of India and the President of Sri Lanka.

2 February 2000 - Letters of Exchange to finalize the annexure.

1 March 2000 - Full implementation of the Free Trade Agreement.

Salient Features Establishment of a Free Trade Area through complete or phased elimination of tariffs The FTA does not remove all tariffs on all goods at once.

Negative Lists to protect national interests of both countries.

The Rules of Origin (ROO) criteria to ensure a minimum local content.

Adequate safety clauses to protect domestic and national interests of both countries.

Review and consultation mechanisms to ensure the smooth operation of the Agreement.

India's commitments (for duty concessions) Granting duty free access for 1351 items by 6 - digit HS Code upon entry into force of

the Agreement (Annexure E). 25% tariff reduction for 528 Textile items

Other than the 429 items in the Negative List of India, 50% reduction of tariffs for the balance 2799 items, upon entry into force of the Agreement followed by phased out removal of tariffs up to 100% in 2 stages within 3 years. Tea and Garments come under a special quota regime.

A 50% fixed tariff concession for imports of Tea from Sri Lanka on a preferential basis subject to an annual maximum quota of up to 15 million kg .

A 50% fixed tariff concession for imports of Garments from Sri Lanka (remaining in India's Negative List) subject to a maximum annual quota of 8 million pieces of which a minimum of 6 million pieces should contain Indian fabrics. No category of Garments could exceed 1.5 million pieces per annum.

Sri Lanka's commitments (for duty concessions) Granting duty free access for 319 items by 6 - digit HS Code (raw materials and

machinery for industries) upon entry into force of the Agreement 50% reduction of tariffs for 889 items by 6 - digit HS Code (raw materials) upon entry

into force of the Agreement followed by phased out removal of tariffs as follows

o up to 70% at the end of the 1st year

o up to 90% at the end of the 2nd year

o 100% at the end of the 3rd year

For 1180 items in Sri Lanka's Negative there will not be any duty preference.

For the remaining 2724 items by 6-digit HS Code, upon entry into force of the Agreement, the removal of tariffs will be phased out within 8 years as follows:

o Not less than 35% before the end of the 3rd year

o Not less than 70% before the end of the 6th year

o Not less than 100% before the end of the 8th year

Indo-Singapore

Declaration of Intent on the Singapore - India Comprehensive Economic Cooperation Agreement (CECA)

1. On 8 April 2002, the Prime Minister of India, Shri Atal Bihari Vajpayee, and Prime Minister of Singapore, Mr. Goh Chok Tong, met in Singapore and agreed to establish a Joint Study Group

to study the benefits of an India-Singapore Comprehensive Economic Cooperation Agreement (CECA).

2. The Joint Study Group met seven times, in its report, the Joint Study Group has concluded that CECA between India and Singapore would provide significant benefits for both countries, in terms of the potential for increased trade and investment, and through economic cooperation.

3. As important as the direct economic benefits the CECA would bring to the two countries, the CECA would serve to strengthen ties between India and Singapore, and to form a bridge between India and the Association of Southeast Asian Nations (ASEAN) region.

4. Significantly, the CECA could serve as a pathfinder for the India-ASEAN Free Trade Agreement, and to connect Singapore to one of the world's most dynamic emerging economies.

Negotiations for the India-Singapore CECA should begin as soon as possible and aim to conclude with the signing of the relevant agreements as early as possible.

ONGOING NEGOTIATIONS

» ASEAN-India FTAOn July 23rd, during his visit to Thailand for the East Asia Summit, External Affairs Minister S.M. Krishna made a strong pitch for the signing of the agreement in October, during the next ASEAN-India Summit, as a key element of a pan-regional strategy.

Later the next day, the Union Cabinet approved the FTA in trade in goods between India and the Association of South East Asian Nations (ASEAN), despite concerns raised by several Ministers over the pact In a press release dated July 26th, the Kerala Independent Fish workers Federation said that the FTA will lead to a huge loss of livelihoods in the fisheries and agriculture sector especially in Kerala (KSMTF Press Release on ASEAN India FTA).

» EU-India FTAThe 7th round of negotiations for a FTA between India and the European Union (EU) took place in Brussels from July 13th to 15th 2009. High on the agenda was the seizure of Indian pharmaceutical consignments during transit in EU, based on the EU line of “strong implementation” of Intellectual Property Rights regulations.

» EFTA-India FTAIndia talks FTA with SwitzerlandDNA | July 15th, 2009Instead of stopping the West and multinational drug makers in their efforts to block India's low-

cost generic drugs exports, the government is helping their cause by aggressively pursuing FTAs with developed economies, which could further hamper the world's access to such drugs.

» India-South Korea CEPAIndia, South Korea to ink trade pact on 7 AugLive Mint | July 15th, 2009Minister of commerce and industry Anand Sharma is scheduled to visit Seoul in early August to sign the agreement which includes trade in goods and services as well as investments. The Cabinet had approved the signing of a Comprehensive Economic Partnership Agreement (CEPA) with South Korea on 2 July. Read More...

» India-New Zealand FTADelay To Start Of Talks With IndiaGuide2 | July 9th, 2009The start of free trade talks with India has been delayed following a change in India's commerce minister since elections in May. New Zealand Trade Minister Tim Groser expected negotiations would be able to start before the end of the year. Preliminary talks were to have been held this month.

BIBLIOGRAPHY

1. www.google.com

2. www.yahoo.com

3. www.times100.com

4. www.searchindia.com