NEW DELHI: After months of inaction and the government’s threat to pull out of the Comprehensive Economic Cooperation Agreement (CECA) with Asean, members of the trading block have agreed to review the trade pact amid concerns that China is using the treaty to ship goods to India, which is unable to take full advantage of the 10-year-old arrangement.
While the scope of the review will be finalised at the official level, New Delhi is keen that some of the anomalies be removed at the earliest. Chief among them is the inability of Indian exporters to get a level-playing field. An official told TOI that Indonesia had lowered duties on only 50% of the items, while close to 75% of its products were getting customs duty benefit in India. A similar problem persisted with some of the other Asean members, although those such as Indonesia are not classified as least-developed countries.
Government officials also pointed to other deficiencies. For instance, Japanese automobiles can be imported into Thailand and Indonesia at 5% duty, while Indian cars faced 35% tariff. Ditto with two-wheelers. Similarly, against 35% duty on rice for trade among Asean members, Indian rice faced a 50% levy.
Another key concern for India are the weak rules of origin meant to check the misuse of treaty benefits by countries that are not part of the agreement. The Asean trade agreement requires at least 35% value addition in one of the member countries for a product to get duty advantage in India. But the rules are seen to be lax with government officials listing Chinese set top boxes, copper and polyester among products which were allegedly misusing the CECA.
The government is also demanding better customs procedure, which will also allow Indian customs authorities to verify the details, a facility that is currently unavailable. Then a provision on exchange of data is also proposed to be provided for as part of the review. While India has data on imports through the preferential duty route, corresponding numbers on exports are inaccessible to it.
Given that the Modi government has criticised its predecessor, UPA, for rushing through with the Asean CECA, it is set to bargain hard when the talks begin. Asean members were earlier linking the review to the conclusion of the Regional Comprehensive Economic Cooperation agreement, where India walked out late last year, arguing the deal was not favourable to it.