A council headed by Prime Minister Manmohan Singh would deliberate on the feasibility of starting a dialogue on a Free Trade Agreement (FTA) between India and Australia, besides a more comprehensive agreement with Indonesia.
The Trade and Economic Relations Committee would meet at the Prime Minister’s residence tomorrow and also take up the issue of a India-European Union FTA, ahead of the talks in Brussels to free markets of 2 billion people, officials told Business Standard.
A Joint Study Group (JSG) had recommended that FTA between India and Australia be signed. The report said trade between the two was rising and had vast potential. It said trade relations between the two countries could be further given a boost with liberalisation like removing tariff and non-tariff barriers, etc, that might form part of FTA.
The bilateral trade between India and Australia expanded around 10 per cent to reach $13.79 billion during 2009-10.
A wider Comprehensive Economic Cooperation Agreement (CECA) with Indonesia would also be taken up. The meeting would also discuss a report by the JSG that favoured constituting a bilateral Trade Negotiations Committee and starting negotiations on Trade in Goods, Trade in Services, Investment and other areas of cooperation with an ultimate aim of signing CECA with the South-east Asian country.
Indonesia accounts for 0.55 per cent of Foreign Direct Investment into India. The trade between the two countries grew by 27 per cent to stand at $11.72 billion in 2009-10.
The committee would also assess setting up a joint study group for a possible free trade pact between India and the Common Market for Eastern and Southern Africa.
India has already implemented free trade pacts with South Korea and the Association of South-east Asian Nations and signed comprehensive pacts with Japan and Malaysia.
The panel would also take up the issue of signing a broad-based trade and investment agreement with EU.
Officials from both sides have been engaging themselves with resolving differences on issues like opening of markets in auto and auto components, wines and spirits and intellectual and property rights and services.
According to officials, the two sides have agreed on four of the 12 key areas that have been in negotiations since June 2007 for BTIA, aimed at freeing vast markets of about two billion people to mutual advantage.
While the EU wants India to eliminate or drastically reduce tariff on Completely Built Units (CBUs) and Completely Knocked Down units (CKDs) in passenger cars, the Indian negotiators are opposing this to protect the domestic industry.
The 27-nation bloc also wants India to open its services sector, including foreign direct investment in retail, banking and other financial services. Bills to increase FDI cap in private insurance companies in India from 26 per cent to 49 per cent is pending with the standing committee on finance, while another bill to increase voting power in private sector bank in line with stakeholders’ equity was tabled in Parliament in the Budget session last month. FDI in retail has been a controversial area and may not be touched, at least till the current assembly elections.
Meanwhile, Commerce Secretary Rahul Khullar is scheduled to visit Brussels later this week to discuss BTIA with EU officials.