India to take re-look at free trade pact with Thailand

Hindu Business Line

We will take a re-look at free trade pact with Thailand: PM

K. Venugopal

Bangkok, July 29 2004

INDIA will take a hard re-look at the free trade agreement with Thailand which the Vajpayee Government initiated last year.

The Prime Minister, Dr Manmohan Singh, announced the changed position of the Indian Government on board the special aircraft to Bangkok on Thursday, where he will take part in the first summit of BIMST-EC.

The summit features leaders of seven countries around the Bay of Bengal: Bangladesh, India, Myanmar, Sri Lanka, Thailand, Nepal and Bhutan. The aim of the forum is to find ways to expand economic cooperation. Dr Singh explained that it was only two months since his Government took office, and therefore it needed more time to study the implications of the agreement.

He, however, made it clear that the first part of the agreement that allows some 80 goods to be traded at lower duties starting September 1 - known as the early harvest programme - would go ahead as scheduled. In fact, he and the Thailand Prime Minister, Mr Thaksin Shinawatra, are expected to sign the papers at a bilateral meeting on Friday that would launch the arrangement. These 80 items, such as apples and mangoes, constitute some 7 per cent of trade between the two countries.

The timetable for reducing tariffs on other goods was to have been worked out over the next two years. But the re-look that Dr Singh has promised is expected to change the schedule.

The Prime Minister’s statement should, in particular, soothe some members of the Indian automobile and auto component industry, which has been apprehensive of the impact that cheap imports from Thailand could make. Producers, including car-maker Hyundai, have been vocal in their opposition, with one of them even suggesting that it could lead to the "de-industrialisation" of India.

Thailand has seen substantial investments from auto and component makers in recent years, as it bids to be "the Detroit of the East".

There was no immediate response from the Thailand government, but a representative of Thailand’s industry did express surprise and disappointment. "There is no reason for Indian industry to fear," assured Mr Satish Sehgal, Director, Board of Trade of Thailand.

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