Transcript FICCI-WTO DIVISION a profile

Awareness Seminar on
Thailand-India FTA
10 September 2004 – Bangkok
Organized by
Department of Trade Negotiations
Ministry of Commerce, Thailand
1
Thailand-India FTA :
Indian Private Sector Perspectives
Presented by
Manab Majumdar
Joint Director and
Team Leader – WTO and FTA Division
2
Overview
Broadly, Indian business welcomes and
supports Thailand-India FTA
FICCI considers the Agreement a
significant milestone in India’s “Look
East” Policy
In a FICCI-survey, 80% of respondents
voted for more such Agreements
Of course, pockets of apprehension exist
Mainly due to lack of information and
understanding
Hence, ‘awareness seminars’ like this are
so valuable
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Benefits – A Snapshot
FTAs create more trade - business to
have greater market access
FTAs have positive impact on FDIinflow
Scope for cost reduction through
sourcing of inputs at competitive
prices
FTAs with neighbouring countries
more likely to succeed because of
lower transport and communication
costs
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Dimension of Opportunities
Enormous potential reflected in
 low bilateral trade turnover
 marginal share in each other’s total trade
India's Share in Thailand's Global Trade - 2003
1.16
Imports
0.8
Exports
0
0.5
1
1.5
per cent
5
Scope for Trade Expansion –
A Preliminary, Limited Exercise (1)
Focus on Thailand’s export opportunities
(of EHS-products)
For each of the 82 EHS-items, we looked
into Thailand’s global exports in 2003
Taking a cut-off $ 15 million, 42 products
were short-listed
For these 42 items, India’s shares in Thai
total exports were then examined – this
suggests significant unexploited
opportunities BECAUSE ……..
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Scope for Trade Expansion –
A Preliminary, Limited Exercise (2)
For 25 such products, India accounts for less
than 1% of Thai global exports
For another 12, India’s share is between 1 and
3 per cent
Frequency Distribution of 42 Selected EHS-Products
in terms of India's share in Thailand's total exports (2003)
India's Share
Number of Tariff Lines
Nil/Negligible
13
Less than 1%
12
1% - 3%
12
Over 3%
5
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Scope for Trade Expansion –
A Preliminary, Limited Exercise (3)
So, there are 37 EHS-products for which
 Thailand’s global exports are significant
and
 India’s share in Thailand’s total < 3%
Matching these items with India’s global
imports, we find that for each of 25 such
products India’s total imports exceed $
10 million
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HS
Code
390690
390799
390810
391990
711319
732690
840991
841381
841459
841490
841510
841821
842199
847190
847989
848079
848180
848210
850431
851711
851790
852390
853400
854011
903289
Thailand's
Global Exports
($ million)
49.1
24.8
36.5
15.7
718.5
168.3
161.9
31.4
51.6
19.1
846.2
227.6
24.7
96.5
49.7
18.0
80.2
140.3
180.9
256.0
65.0
19.2
743.0
228.4
27.7
India's
Share in
Thai Total
(%)
0.95
1.62
0.00
0.99
0.06
2.46
2.86
0.37
0.47
0.17
1.12
0.07
1.52
0.19
1.06
2.01
0.27
0.23
1.94
nil
0.51
nil
0.62
0.09
1.35
India's
Global
Imports
($ million)
27.5
18.4
19.6
17.3
50.8
101.4
37.9
30.4
11.0
67.0
10.4
18.3
33.1
92.2
117.1
26.3
104.7
64.4
25.2
19.4
169.6
28.0
27.9
70.1
43.7
India's
Basic
Duty
Rate as
of 1 Jan
2004 (%)
25
25
25
25
25
25
25
25
25
25
25
25
25
15
25
25
25
25
25
15
15
10
15
25
25
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Potential Being Translated into
Business Reality
It’s already happening – leading Indian auto
companies are asking for price quotations from
Thailand
Sona Koyo Steering to source auto parts from
Thailand
Increasing number of Indian manufacturers to
set up manufacturing facility and buying offices
in Thailand




Rico Auto has set aside $ 3 – 4 million
Ashok Leyland looking at manufacturing base
Jay Bharat Maruti in a technical joint venture
Sona Steering to establish a Representative Office
Another 5-7 companies are finalising similar
strategies
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Benefits Would Flow Both Ways
India’s obvious attraction is its huge market
Scope for production sharing
Advantages for India include inter alia
 Tapping the Thai market – e.g. Toyota Kirloskar
 Stepping up competitiveness by sourcing costefficient components from Thailand – e.g. Sheet
Metal Components required in automotive
sector
 Likely positive impact in ACs and Refrigerators
 Right platform and push for Indian companies
to position themselves as global players
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Look At Services Too
Quickly explore prospects for expanding
bilateral trade in services
May start with select sectors





IT-enabled
Health-related
Audio-visual
Education
Tourism & travel-related
Sector coverage has to be substantial
eventually
12
Challenges to Meet
Some companies will lose out
Risk of third-country products
unduly getting duty advantage –
‘trade deflection’
Emergence of ‘inverted duty
structure’ – (in India’s case)
Pending internal reforms
13
The Way Forward (1)
Strictly enforce and monitor ‘Rules of
Origin’
Aggressively pursue necessary
internal reforms
Help the ‘loser’ firms readjust and
restructure their business
Widen the consultation process to all
stakeholders
Strengthen the communication
process between private sectors of
both the countries
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The Way Forward (2)
FTAs with right
partners
Accelerated process of
internal reforms
‘Enabling environment’ for trade
and industry
Enhanced competitiveness of
domestic enterprises
Faster regional and global
integration of the economy
15
THANK YOU
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