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India initiates major free trade move in SAARC

Thursday November 10, 2011 07:24:44 PM, Manish Chand, IANS

Addu Atoll (Maldives): In a major boost to its trade liberalisation effort, India Thursday brought down the sensitive list for least developed countries under the South Asian Free Trade Area Agreement (SAFTA) to 25 tariff lines from the existing 480 and said zero basic customs duty access will immediately be given to all the removed items.

"I am happy to announce that, in a major trade liberalisation effort, the government of India has issued a notification to reduce the sensitive list for the least developed countries under the South Asian Free Trade Area Agreement from 480 tariff lines to 25 tariff lines," Prime Minister Manmohan Singh, in his address at the South Asian Association for Regional Cooperation (SAARC) summit here, to loud applause.

"Zero basic customs duty access will be given for all items removed with immediate effect," he added.

Under the SAFTA agreement, member countries are allowed to retain "sensitive list" that are not offered for concessional treatment. Now the least developed countries like Bangladesh, Bhutan and Nepal will have increased access to Indian markets. Tariff line refers to a category in a country's tariff schedule.

Manmohan Singh said he recognized that non-tariff barriers are an area of concern. "India is committed to the idea of free and balanced growth of trade in South Asia. Competition begins at home. Our industries have to learn to compete if our economies are to have a future in this globalised world that we live in," he said.

As per the SAFTA agreement, non-LDCs that include India, Pakistan and Sri Lanka, are required to reduce their tariff to 0 to 5 percent by 2013, while LDCs are required to reduce tariff to this level by 2016.

For non-LDCs India maintains 865 tariff lines under sensitive list while Pakistan has 1,169 items. Among the other members Sri Lanka has 1,065; Bangladesh 1,254, Bhutan 157; Maldives 671 and Nepal 1,313 tariff lines under sensitive list.

Noting that all South Asian nations could benefit from the respective comparative advantages, he said these include the hydropower and natural resource endowments, possibilities of earnings from transit, marine resources, scientific and technological base and above all young population, which will drive consumption and investment in the years ahead.

"We should expedite the finalization of the SAARC Agreement on Investment," he told the heads of states and governments of the eight member-nations.

Pointing out that the SAARC summit here had come at a time when the global economy was under acute stress, Manmohan Singh said this had imposed "a fresh and entirely uncalled for burden" of the region's development efforts.

"We hope that the leaders of the major economies, particularly in the Eurozone, will show the wisdom and will that are required to revive the global economy," he said. Manmohan Singh had just a week ago attended the G20 meet at Cannes in France, where the Eurozone issues drew much attention.

"However, the world economy is going to take time to recover. In the meantime, developing countries like ours will be squeezed for capital, investments and markets for our exports," he warned, seeking "imaginative ways to create new avenues and sources of growth and investment" in South Asia.

"If we can create favourable conditions for development at home, there is no reason why our investors should seek greener pastures elsewhere," he said, assuring the leaders that "the complete normalization of trade relations will create huge opportunities for mutually beneficial trade" within South Asia.

Impressing upon the SAARC leadership to work towards creating a climate whereby the wealth generated within is invested back in the region, Manmohan Singh, a reputed economist himself, said: "This will be the most ringing endorsement of our vision of a regional economy without boundaries."

Noting that there were "promising signs" that South Asia was increasingly getting plugged into the growth dynamic of Asia, the prime minister said despite all the difficulties, the nations in the region had been able "to maintain a respectable growth rate" in the last few years.

"This encouraging trend has coincided with the growing pace of SAARC integration. This shows that we are on the right path," he said, adding that he believed the process should move faster, though at a pace all nations of the region are comfortable with.

"I recognize that India has a special responsibility that flows from the geography of our region and the size of our economy and market," he said.

As one of the eight SAARC leaders who had attended the last four summits, Manmohan Singh said he could see the "impressive progress" made by the organisation in recent years.

"The momentum and scope of our cooperation has undoubtedly increased," he said, pointing out that since the last summit, ministers of external affairs, home, finance, transport, tourism, commerce, energy and environment had met.

He also noted that "greater exchanges and communication among ourselves should be followed by concrete outcomes".

Manmohan Singh said in his discussions with the leaders of South Asia, he got a sense of "collective commitment and desire to give greater meaning and content" to SAARC.

"Admittedly, there is a lot to be done but the political will is there. We have all come to believe that regional cooperation is good for each one of our countries," he added.

He also reaffirmed India's commitment to do whatever is within its capabilities to make SAARC an effective instrument to deliver on the vision of common peace, shared prosperity and cooperation.


 



 

 

 

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