The government should study the bilateral free trade agreement with Singapore, the Global Trade Research Initiative (GTRI) said on Sunday. The think tank suggested that the government should review the trade pact with the ASEAN bloc.
Notably, Singapore is a part of the 10-nation ASEAN bloc, with which India has been in a free trade agreement (FTA) in goods since 2010. Additionally, India also put in place a detailed FTA with Singapore in 2005, reported PTI.
The global think-tank also suggested that India should follow a similar exercise with Thailand, which is another member of the ASEAN bloc. India entered into a limited FTA with Thailand in 2006. These suggestions come at an important time as India and ASEAN agreed to discuss and review their trade pacts and aim to finish the whole exercise by 2025.
The members of the bloc include Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. From these, the five countries – Indonesia, Singapore, Malaysia, Thailand, and Vietnam – together contribute to 92.7 per cent of Indian exports and 97.4 per cent of imports from ASEAN.
India’s exports to the bloc stood at $19.1 billion in 2008-09 and surged to $44 billion in 2022-23. However, imports from the multinational body increased to $87.6 billion in the previous fiscal year, against $26.2 billion in 2008-09.
GTRI, in its report, noted, “India has a separate FTA with Singapore with more relaxed rules of origin of products. The two FTAs may be studied together. India has a separate FTA with Thailand called early harvest scheme (EHS) with relaxed rules of origin than what India-ASEAN FTA offers. Substantial imports may be happening through EHS. The two FTAs may be studied together.”
The report stated that with Indonesia, in 2022-23, India’s imports stood at $28.8 billion and the primary imports included coal at $14.4 billion, in which steam coal imports stood at $13.7 billion, and coking coal at $0.7 billion. Further, India also imported palm oil worth $5.6 billion and copper ore worth $0.9 billion from Indonesia. The think-tank stated these imports took place at the most favoured nation (MFN) zero duty and the FTA review could possibly harm these imports.
The GTRI co-founder, Ajay Srivastava, noted, “Coal imports have increased by 121 per cent in the past one year alone and most coal is steam coal, available in abundance in India. India should focus on using local coal. Offering MSP (minimum support price) on mustard and other similar oils will cut domestic prices and wean people away from inferior palm oil gradually.”
Regarding Singapore, the report noted that electronics made up a major part of the imports, coming up at $7.2 billion in the previous fiscal year, including computers at $1.7 billion and integrated circuits at $1.5 billion. Other prominent imports included plastics, iron and steel, gold, and some fertilisers. “Singapore does not produce coal, iron, steel, or fertilizers. Firms may be transhipping these from Singapore. But this adds to cost and is bad business. Such imports must be out of the FTA, but need investigation why they are happening in the first place. Rules of Origins may be checked for use of value addition norms for electronics products, gold, etc,” Srivastava said.
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