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Tuesday, Aug 31, 2004

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India, Thailand move towards free trade area

By Our Special Correspondent

NEW DELHI, AUG. 30. India today took the first step towards a free trade area (FTA) with Thailand by concluding a protocol to implement one of the facets of the framework agreement on FTA. The protocol is meant to implement the Early Harvest Scheme (EHS) which provides for fast track elimination of tariffs on common items of export interest for both the countries.

The protocol signed here today by the Commerce and Industry Minister, Kamal Nath, and the Thai Commerce Minister, Watana Muangsook, will come into effect from September 1.

82 items exempted

The early harvest schemes provides for elimination of tariffs in 82 items in three phases over two years. Tariffs would be brought down to 50 per cent on September 1, and by 75 per cent in the subsequent year. By 2006, there will be a duty-free trade regime on 82 items. Later the second phase of FTA implementation will begin with the aim of having a free trade area between India and Thailand by 2010.

Under the timetable laid down in the framework agreement, negotiations for FTA in goods have to be concluded by March 2005 and for services and investment by January 2006. The 82 items on which tariffs are to be reduced include gear boxes, television picture tubes, wrist watches, refrigerators, textile spindles, spinning rings, machinery for moulding, pipes, boiler shells, ball bearings, pulleys, signalling equipment and printed circuits.

Automobile sector

Speaking after the signing ceremony, Mr. Kamal Nath sought to reassure domestic industry especially the automobile sector and said their fears were unfounded. He said the Government was aware of the high input costs faced by the industry and was in the process of moving towards an inverted duty structure as in other countries.

Historic landmark

Signing of the protocol marked a historic landmark in bilateral relations between India and Thailand and was also a major step in the country's `Look East Policy'.

He said Thailand became the second country after Sri Lanka with which India would be implementing an FTA in a phased manner. "Apart from our bilateral engagement with Thailand, we are also engaged in negotiations with Singapore, Asean and BIMST-EC to strengthen economic cooperation. We believe that our bilateral engagement with Thailand would act as a catalyst towards our overall engagement with Sean and BIMST-EC." Mr. Kamal Nath said the agreement would help in increasing the formation of joint ventures and investments in both countries. It would also help in doubling the bilateral trade from the present level of $ 1.5 billion in next few years.

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