Chapter-7. Commercial Relations and Trade Agreements

Transcription

1 Chapter-7 Trade diversification reflects an economy s growing competitiveness resulting from its broadening productive base with processes getting more efficient, improving fundamentals, and its increasing willingness and capabilities to effectively integrate with the world economy. Asia and ASEAN region is India s largest trading partner. During the period April- October , Asia and ASEAN region accounted for about 56% of India s trade (exports and imports). Europe and America, together, account for around 32.3% of India s trade during this period. Region wise share of India s Export and Import during April October, is shown in Chart 7.1 and Chart 7.2 respectively. India s trade and the growth rate of India s trade with major regions of the world are shown in Chart 7.3 and Chart 7.4 respectively. Chart 7.1 Region wise share of India s Export (April October, ) 96

2 CHAPTER-7 Chart 7.2 Region wise share of India s Import (April October, ) Chart 7.3 India s trade with major regions of the world (April October, ) 97

3 Annual Report Chart 7.4 Growth Rate (%) in India s Trade with Major Regions (April October, ) I. Trade with Asia a) South East Asia ASEAN Region-General India s trade with ASEAN (Association of South East Asian Nations) countries viz. Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam stood at US $ million during the year and at US$ million during the year (Till October, 2011). Major destinations for India s exports in the region are Indonesia, Malaysia, Singapore, Thailand and Vietnam, while the major sources of imports are Indonesia, Malaysia, Singapore, Thailand and Myanmar. Major Commodities of Export & Import ASEAN The principal commodities of export include petroleum products, oil meals, gem and jewellery, electronic goods, cotton yarn/rmg cotton, machinery and instruments, primary/semi-finished iron and steel, transport equipments, marine products, drugs/pharma, inorganic/organic/ agro chemicals, dyes/intermediates, etc. The principal commodities of import include coal/coke/ briquettes, vegetable oils, petroleum oils, electronic goods, organic chemicals, machinery except electrical machinery, professional instruments, wood and wood products, non-ferrous metals, metalifers ores and metal scrap, etc. Trade Promotion Activities India has Joint Trade Committees with Brunei, Myanmar, Thailand and a Joint Working Group on Trade & Investment with the Philippines. India has established an ASEAN India Business Council (AIBC). India also has Joint Business Councils (JBC), established at the business level, with Singapore, Malaysia, Indonesia, Thailand, Vietnam and Philippines. Meetings of JBCs are held between the business communities of both sides to discuss a wide range of issues of mutual interest for expansion of bilateral trade. Such meetings also act as fora for businessmen to mutually interact and explore the potential for growth in trade and investment relations. India has organised First India-ASEAN Business Fair in New Delhi during March, 2011 and is considering 98

4 CHAPTER-7 Table 7.1 India ASEAN Bilateral Trade (US $ million) Country (Till October, 2011) Exports Imports Total Trade Exports Imports Total Trade Exports Imports Total Trade Brunei Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Vietnam Total for ASEAN India s total Trade %age share of ASEAN Countries in India s total trade , , , , , , , , , , , , % 8.86% 9.34% 10.86% 8.28% 8.69% 12.50% 8.94% 10.29% organising the Second India-ASEAN Business Fair in December, Engagements with ASEAN In order to address the economic content of the Look East Policy, a continuous dialogue is maintained with ASEAN and the countries of South- East Asia. Summit level engagements, Ministerial meetings and official level discussions are held in order to fulfil the Look East Policy agenda. between India and the ASEAN on 13th August The Agreement has been fully implemented by ASEAN Member States and India. The Agreement is expected to further boost bilateral trade and investment between India and the ASEAN. India and the ASEAN are currently negotiating Agreements on Trade in Services and Investment which are targeted to be concluded within the year India and the ASEAN have signed the Trade in Goods Agreement under the broader framework of Comprehensive Economic Cooperation Agreement 99

5 Annual Report The Union Minister for Commerce, Industry and Textiles, Shri Anand Sharma attending the ASEAN Economic Ministers (AEM)-India Consultations-9 along with the other ASEAN Trade Ministers, at Manado, Indonesia India-Malaysia Comprehensive Economic Cooperation Agreement India has signed a Comprehensive Economic Cooperation Agreement (CECA) with Malaysia on 18th February The Agreement has come into effect from 1st July Under the CECA, India and Malaysia has offered commitments more than the commitments offered by them under ASEAN -India Trade in Goods Agreement. Key items on which Malaysia has offered market access to India are basmati rice, mangoes, eggs, trucks, motorcycles and cotton garments which are all items of considerable export interest to India. Key items of Malaysia s interest on which India has offered market access are fruits, cocoa, palm oil products and synthetic textiles. For refined palm oil (RPO) exports by Malaysia into India, as compared 100 to the concessions under the India-ASEAN Trade in Goods (TiG) Agreement, only advancement of timeline from 2019 to 2018 is offered by India, retaining the end-tariff rate of 45%. India-Thailand Free Trade Agreement On 9th October 2003, India and Thailand signed a Framework Agreement for establishing an India- Thailand Free Trade Area (FTA). The Agreement envisages negotiation for establishing an India- Thailand FTA with a view to strengthening and enhancing liberalization of trade through progressive elimination of tariffs, progressive liberalization of trade in services, establishment of an open and competitive investment regime etc. With a view to accelerating the realization of benefits from this Agreement, pending negotiations towards the comprehensive FTA, India and Thailand implemented an Early Harvest Scheme (EHS)

6 CHAPTER-7 comprising 82 items of mutual interest for which both sides have undertaken tariff concessions during in a phased manner. The negotiations for the India Thailand Free Trade Agreement are underway and both sides have agreed to conclude a Comprehensive Free Trade Agreement including Trade in Goods, Services, Investment and Economic Cooperation as a single undertaking by May, Second Protocol has been signed on to amend Framework Agreement for establishing Free Trade Area between India and Thailand for (i) inclusion of compression-type combined refrigerator-freezers, fitted with separate external doors, household type in the list of Early Harvest Scheme (EHS) items and to eliminate tariff, simultaneously by both sides, on this item with effect from the date of implementation of this protocol and (ii) to amend Interim Rules of Origin for incorporating a clause of Third Party Invoicing. India-Indonesia Comprehensive Economic Cooperation Agreement Following the Joint Declaration of 2005 signed between Prime Minister of India and Indonesian President on establishing a New Strategic Partnership, a Joint Study Group was set up in 2007 to examine the feasibility of a Comprehensive Economic Cooperation Agreement (CECA) between the two countries. The Group held 5 meetings and submitted its Report in September The JSG recommended launching of negotiations between the two countries on a bilateral CECA by constituting a Trade Negotiating Committee (TNC) covering substantially all trade in goods and services; investment; trade facilitation; and other areas of economic cooperation, as a single undertaking. Both Governments internally processed the Report of the JSG and agreed to accept the recommendation to commence bilateral CECA negotiations to be built on, and going beyond the ASEAN-India FTA. In January 2011, both sides announced the launch of bilateral CECA negotiations. b) North East Asia India s trade with the North East Asian region comprising of China, Japan, Republic of Korea, Hong Kong China, Taiwan China, Democratic People Republic of Korea, Macao and Mongolia stood at US$ billion during , which is an increase of 43.51% over the previous year. Exports to the North East Asia region were of the order of US$ billion during , registering a growth of 45.80% over the last year. Imports from the region were increased by % to US$ 76.1 billion during India s major trading partners in the region are China, Japan, Hong Kong and Republic of Korea. Trade with North East Asian countries from to (April-October) is given below. Table 7.2 Trade with North East Asian Countries (Value in US$ million) Year Exports Imports Total Trade Balance of Trade (-) (-) (-) (-) (April-Oct)* (-) (* Provisional) (Source DGCI&S) 101

7 Annual Report Major items of export to the region are gems and jewellery, non-ferrous metals; petroleum (crude and products), ferro alloys, iron ore, cotton yarn, fabric, made ups and marine products. Major items of import include electronic goods, machinery, organic chemicals, pearls, precious and semi-precious stones, iron and steel, transport equipment and organic chemicals. China and India have agreed to endeavor to raise the volume of bilateral trade to US$ 100 billion by Trade with China has already crossed US$ 60 billion during Major items of Indian exports to China include non-ferrous metals, iron ore, ferro alloys, cotton raw, other ores and minerals, plastic and linoleum products, processed minerals. Major imports from China include electronic goods, project goods, iron and steel, organic chemicals, machinery and transport equipments. Indian exports to Japan registered a growth of 43.05%, while imports from the country registered a growth of 28.18% during over that of the previous year. Major items of export to Japan include ferro alloys, gems and jewellery, marine products, transport equipments, iron ore, petroleum and oil meals. Major items of import from Japan are machinery, electronic goods, transport equipment, iron and steel, professional instruments and organic chemicals. A bilateral trade target of US$ 25 billion by 2014 has been fixed. It is expected that after coming into force of CEPA from 1 st August 2011, this target will be achieved during the stipulated period. Exports to Hong Kong, China accounted for 4.1% of India s overall exports during During India s exports to Hong Kong, China amounted to US$ billion registering a growth of 30.96% over the last year. Imports from Hong Kong, China in amounted to US$ 9.4 billion, recording a growth of 98.88% over the previous year. The major items of exports to Hong Kong are gems and jewellery, finished leather, electronic goods, marine products, natural silk yarn, cotton yarn fabrics made ups, machinery and instruments, non-ferrous metals and other commodities. The share of Gems and Jewellery in India s exports to Hong Kong is about 80%. The major items of imports are pearls, precious and semi-precious stones, electronic goods, machinery, gold, silver and printed books, newspapers & journals. Indian exports to the Republic of Korea during amounted to US$ 4.1 billion registering a growth of 21.10% over the last year while imports from Korea during amounted to US$ billion registering a growth of 22.15%. Major items of exports are petroleum products, cotton yarn, fabrics, made ups, oil meals, minerals and ores, iron ore, gems & jewellary, ferro alloys, aluminum, molasses and non-ferrous metals. Major items of imports are electronic goods, machinery, transport equipment and iron and steel. Trade Negotiations i) India - Korea CEPA A Comprehensive Economic Partnership Agreement (CEPA) between India and Republic of Korea was signed on 7th August The CEPA came into force from 1st January, The first meeting of the Joint Committee at Ministerial level to review the implementation of CEPA was held on 20th January 2011 in New Delhi. The second meeting of JS/DG Level to review the implementation of CEPA was held on 29 th September 2011 in Seoul. ii) India - Japan CEPA A Comprehensive Economic Partnership Agreement (CEPA) between India and Japan was signed on 16th February, This Agreement has come into force from 1 st August,

8 CHAPTER-7 c) Bilateral Trade Relations with countries in South Asia and Iran Afghanistan India & Afghanistan signed the Preferential Trade Agreement on March 6, 2003 in New Delhi. This agreement would remain in force till either party gives to the other a notice for its termination. Under the Agreement, India has granted preferential tariff for 38 products from Afghanistan including raisins, dry fruits, fresh fruits and spices whereas Afghanistan granted preferential tariff to 8 items from India including tea, antisera and medicines, refined sugar, cement clinkers and white cement. Afghanistan was inducted as the eighth member of SAARC during the Fourteenth SAARC Summit held in New Delhi on 3-4 April The provisions of TLP are applicable to Afghanistan with effect from 7th August, India has extended the TLP to Afghanistan vide Notification No. 96/2011-Customs dated MOU between the Government of Afghanistan and Government of India on the Co-operation in the field of Cement sector was signed on 12 th January 2012 at Hyderabad. EXIM Bank has introduced Buyers Credit facility to enable financing of infrastructure projects. India s trade with Afghanistan has increased substantially from US$ million in to US$ million in The trend in trade between India and Afghanistan is given in Table below. Table 7.3 Bilateral Trade with Afghanistan (Value in US $ million) As on 31/01/2012 Year Exports Imports Total Trade Balance of Trade (April-Oct) (April-Oct) Source: DGCI&S Bangladesh The Bilateral Trade Agreement between India and Bangladesh, renewed from time to time, provides for expansion of trade and economic cooperation, making mutually beneficial arrangement for the use of waterways, railways and roadways, passage of goods between two places in one country through the territory of the other, exchange of business and trade delegations and consultations to review the working of the Agreement at least once a year. A Memorandum of Understanding (MoU) on establishment of Border -Haats at Baliamari- Kalaichari (Pillar No. 1072) and Lauwaghar-Balat (Pillar No. 1213) at Meghalaya, India Bangladesh border was signed on during the visit of Mr. Muhammad Khan, Commerce Minister, 103

9 Annual Report Bangladesh. Commerce, Industry and Textile Minister has inaugurated the Border Haat at Kalaichar on 23rd July Following commodities are allowed to be traded in the Border Haats: (a) locally produced vegetables, food items, fruits, spices; (b) minor local forest produce e.g. bamboo, bamboo grass, and broom stick but excluding timber; (c) products of local cottage industries like Gamcha, Lungi etc.; (d) small locally produced agriculture household implements e.g., dao, plough, axe, spade, chisel etc.; (e) locally produced garments, melamine products, processed food items, fruit juice, etc. The commodities are allowed to be exchanged in the designated Border Haats in local currency and/or barter basis. Each individual is allowed to purchase only as much of the locally produced commodities which are reasonable for bona-fide personal/family consumption. Estimated value of such purchases shall not be more than respective local currency equivalent of US$50 (fifty) for any particular day. The Union Minister for Commerce, Industry and Textiles Shri Anand Sharma addressing a press conference with his Bangladeshi Counterpart, Mr. Muhammad Faruk Khan, at Dhaka, Bangladesh on April 23,

10 CHAPTER-7 Prime Minister visited Bangladesh on September 6-7, The following bilateral documents were also signed during the visit:- (i) Addendum to the MoU between India and Bangladesh to Facilitate, Overland Transit Traffic between Bangladesh and Nepal, (ii) MoU on Renewable Energy Cooperation (iii) MoU on Conservation of the Sundarban, Protocol on Conservation of the Royal Bengal Tiger of the Sunderban, (iv) MoU on Cooperation in the field of Fisheries, (v) MoU on Mutual Broadcast of Television Programmes, (vi) MoU between Jawaharlal Nehru University and Dhaka University (vii) MoU on Academic Cooperation between National Institute of Fashion Technology (NIFT), India and BGMEA Institute of Fashion and Technology (BIFT), Bangladesh. Both sides are working on several projects to improve trade infrastructure and connectivity. Department of Border Management, Ministry of Home Affairs is developing 7 Integrated Check Posts (ICPs) on India Bangladesh Border viz; Petrapole, Agartala, Dawki, Hili, Chandrabangha, Sutarkhandi and Kawarpuchiah. Further, infrastructure at 8 Land Custom Stations (LCSs) along the Indo Bangladesh border are being developed under the ASIDE scheme of D/O Commerce. These LCSs are Borosora, Dalu, Ghasupara, Mahadipur, Hilli, Phullbari, Srimantpur and Gojadanga. The work at Phulbari, LCS has been completed. The total projected cost of all the ICPs and LCSs being developed is 125 US$ million. At Akhaura, the construction work has commenced. The contract for the work at Petrapole, ICP has been awarded and the foundation stone has been laid on 27 th August, India is providing Buyers Credit to Bangladesh Government agencies for large project exports, especially in the infrastructure sector such as roads, bridges, railways, power lines, sewerage plants, water treatment plants and housing. The credit spanning over a period of 5-8 years will be provided under National Export Insurance Account (NEIA) through Exim Bank. Customs has issued a circular dated wherein the samples would be drawn from the first five consecutive consignments of each food product of a particular importer and in the event of samples conforming to the prescribe standards, the customs would switch to a system of checking 5% - 20% of the consignment of the food items on a random basis. This circular has simplified the testing of food items requirements for Bangladesh exporters. India s trade with Bangladesh has increased substantially from US$ million in to US$ million in The trend in trade between India and Bangladesh is given in Table below: 105

11 Annual Report Table 7.4 Bilateral Trade with Bangladesh Value in US $ million Year Exports Imports Total Trade Balance of Trade (April-Oct) (April-Oct) Source: DGCI&S Bhutan The current Free Trade Agreement between India and Bhutan, namely Agreement on Trade, Commerce and Transit was signed in New Delhi on 28th July, 2006 for a period of ten years with effect from 29th July, Under this Agreement India also provides transit facilities to landlocked Bhutan to facilitate its trade with third countries and movement of goods from one part of Bhutan to another through Indian Territory. The India- Bhutan bilateral meeting on Trade and Transit was held on August 18-19, 2011 at New Delhi wherein the detailed discussion on various bilateral issues was held. Most important requirements of Bhutan are mainly met by imports from India. Therefore, Bhutanese have been requesting for blanket exemption from application of any export bans by India on essential food commodities. Their request was considered vide DGFT notification No. 87 (RE-2010/ ) dated exempting Bhutan from the application of export ban on the following items, with annual limits indicated against each:- (i) Milk Powder : 1,600 Metric Tonnes (ii) Wheat : 24,000 Metric Tonnes (iii) Edible Oil : 2,400 Metric Tonnes (iv) Pulses : 1,200 Metric Tonnes (v) Non-Basmati Rice : 21,200 Metric Tonnes Bhutan s request for use of Ghasuapara and Dalu Land Customs Stations (LCSs) in Meghalaya on Indo-Bangladesh border as on exit/entry points for Bhutan s trade with Bangladesh has been considered. A Letter of Exchange (LoE) has been signed for allowing LCSs from 1 st February, The Letter of Exchange (LoE) to amend the Letter of Guarantee (LoG) under the India-Bhutan Agreement on Trade, Commerce and Transit has been finalised for implementation from A Sub-group has also been constituted for identifying the points of trade interest to Bhutan and also suggesting the infrastructure required at these places. Limit of Quota restrictions for import of marble from Bhutan has been raised from 1847 MT to 5882 MT vide DGFT Notification No. 69 (RE-2010)/ dated The present enhancement may cover their production capacity. 106

12 CHAPTER-7 Bhutan s request for Duty Free Access at international airport in India has been considered vide notification no. 77/2011- Customs (NT) dated Commercial transactions are carried out in Indian Rupees and Bhutanese Ngultrum. India s trade with Bhutan has increased substantially from US$199.71million in to US$ million in The trend in trade between India and Bhutan is given in Table below: Accountability and Divestment Act of 2010 which was signed into law by President Obama on July 1, The Act broadened the scope of sanctionable activities to Iran s energy and other sectors and has also sought to make sure that the sanctions are enforced. India s exports to Iran and Imports from Iran showed a declining trend in as compared to In , the total trade with Iran was US$ 14, million which Table 7.5 Bilateral Trade with Bhutan (Value in US $ million) Year Exports Imports Total Trade Balance of Trade (April-Oct) (April-Oct) Source: DGCI&S Iran Iran has a strategically important location bordering Pakistan and Afghanistan and sitting atop the Persian Gulf and Hormuz Straits. Its rich deposits of oil and gas as well as other mineral resources, bolsters its important regional role. India s core interest in the bilateral relationship with Iran includes its need for steady and undisrupted supply of crude oil and gas as well as acquisition of oil/gas fields for its energy security. Iran is also crucial for connectivity to Afghanistan and Central Asia. Iran is not a member of WTO, as on date. Hence, it is trying to enter into a number of FTAs and Preferential Trade Agreements (PTAs) with countries located in Asia, Africa and Europe. India s bilateral engagement with Iran has been affected by the Comprehensive Iran Sanctions, decreased to US$ 13, million during This was essentially because of the proscriptions announced by US in dealing with Iranian banks as a result of which both exporters and importers are facing trouble in recovering payments. After inclusion of Iran s major banks under various UN, US & EU sanctions, normal trade transactions/opening of LCs, etc. have suffered. Payment settlement is the main issue for trade with Iran. India s trade with Iran has increased substantially from US$ million in to US$ million in The trend in trade between India and Iran is given in Table below: Maldives The Bilateral Trade Agreement signed on 31st March, 1981 will remain progressively in force 107

13 Annual Report Table 7.6 Bilateral Trade with Iran (Value in US $ Million) Year Export Import Total Trade Balance of Trade (-) (-) (-) (-) (-) (April-Oct) (April-Oct) Source: DGCI&S until it is modified or terminated by either country by giving three months notice to the other. The Agreement provides for Most Favoured Nation (MFN) treatment to each other in trade and merchant vessels, promotion of commercial and technical cooperation through exchange of delegations and participation in trade fairs and exhibitions and supply of essential commodities by Government of India to Government of Maldives on annual quota. All payments between India and Maldives are in freely convertible currency, subject to their foreign exchange regulations. India s trade with Maldives has increased substantially from US$71.73 million in to US$ million in The trend in trade between India and Maldives is given in Table below: Nepal The Treaty of Trade and the Agreement of Cooperation between the two countries was signed on 27th October, 2009 at Kathmandu, Nepal. The Treaty aims at improving bilateral trade between the two countries by increasing the mutually agreed points of trade, expansion in the list of items included for preferential trade, simplification of trade procedures, improving Nepalese supply Table 7.7 Bilateral Trade with Maldives (Value in US $ million) Year Exports Imports Total Trade Balance of Trade (April-Oct) (April-Oct) Source: DGCI&S 108

14 CHAPTER-7 capacities, provision of two level institutional mechanisms for problem resolution etc. An Inter- Governmental Committee (IGC) meeting on Trade, Transit and Cooperation to control unauthorised trade was held on 5-6 th December The Indian delegation was led by Dr. Rahul Khullar, Commerce Secretary. Both sides held detailed discussion on various bilateral issues. Nepalese request for waiver of Additional Duty of Customs (ADC) on all export items to India was considered vide Notification No.107/2011-Customs dated Provisions of Treaty of Trade signed in October 2009 for replacement of Duty Refund Procedure (DRP) have been implemented vide Notifications 24-29/2011-Central Excise (N.T.) dated Double Taxation Avoidance Agreement (DTAA) with Nepal was signed on 27th November 2011 which will help exporters and investors of both the countries in improving mutual business engagements. Nepal has agreed to consider restoration of Margin of Preferences (MoP) on import duty for Indian goods (which was 20% in and eroded to 5% in ) in their forthcoming Budget Session (June-July, 2012) and to abolish agricultural reform fee of 5% on import of primary products from India. India is providing Buyers Credit to Nepalese Government agencies for large project exports, especially in the infrastructure sector such as roads, bridges, railways, power lines, sewerage plants, water treatment plants and housing from India. The credit will be provided under National Export Insurance Account (NEIA) through EXIM Bank for a maximum period of 5-8 years. India s trade with Nepal has increased substantially from US$ million in to US$ million in The trend in trade between India and Nepal is given in Table below: Table 7.8 Bilateral Trade with Nepal (Value in US $ million) Year Exports Imports Total Trade Balance of Trade (April-Oct) (April-Oct) Source: DGCI&S 109

15 Annual Report Pakistan India and Pakistan have no formal trade agreement. India granted the MFN status to Pakistan way back in but Pakistan is yet to reciprocate. Recently, a decision taken in this regard in the Cabinet meeting of Pakistan, communicated through the Press Release of Pakistan Government dated 2nd November 2011, states that the (Pakistan) Cabinet gave Ministry of Commerce the mandate to take the process of normalization forward, which would culminate in the observance of Most Favoured Nation (MFN) principle in its true spirit. Pakistan maintains a list of importable items from India, called Positive List, as notified from time to time. Till recently, the Positive List of Pakistan contained 1946 items which has been increased to 1963 items, an addition of 17 new items vide Notification F. No. 2(8)/2011-A.C(T.P) dated 28 th December, 2011 issued by Government of Pakistan. This notification also increased the items allowed for import by Pakistan from India through land route from 110 to 137. Bilateral trade and commerce talks were held between Commerce Secretaries of India and Pakistan on April 2011, in Islamabad (Pakistan). The two sides, inter-alia, agreed to improve trade infrastructure and expand trade through Attari-Wagha land route. It was agreed to set up a Working Group to address and resolve clearly identified sector-specific barriers to trade. Both sides agreed to undertake new initiatives to enable trade in electricity and Bt. Cotton seeds as also expand trade in petroleum products. It was agreed that cooperation in Information Technology sector would be encouraged through the private sector. Both sides agreed to facilitate grant of Business Visas to encourage expansion of trade. Pakistan recognized that grant of MFN status to India would help in expanding bilateral trade relations. It agreed to replace its present Positive List with Negative List, by October During the recent meeting of Commerce Ministers of India and Pakistan held in New Delhi on , the Ministers affirmed that fully normalized commercial links between both countries would strengthen the bilateral relationship and build the bridges of friendship, trust and understanding- for mutual benefit of their people and promotion of prosperity in South Asia. Both Commerce Ministers mandated their Commerce Secretaries to pursue with vigor the task of fully normalizing bilateral trade relations. They agreed that their countries would cooperate for a high ambition of preferential trade relations under the framework of South Asian Free Trade Agreement (SAFTA). They noted with satisfaction the joint and collaborative efforts already being made by India and Pakistan to liberalize trade in goods and services under SAFTA. They agreed that all mutual obligations contracted under SAFTA would be implemented with full sincerity. Sixth round of talks on commercial and economic co-operation between Commerce Secretaries of India and Pakistan have been held on th November, 2011 in New Delhi. During the above discussion, following points have been agreed: (i) Both sides have agreed to jointly work to more than double bilateral trade within three years, from current levels of 2.7 billion US dollars per annum to about 6 Billion dollars. (ii) The Agreed minutes of the Sixth round of talks reflect Pakistan s position for observance of Most Favoured Nation (MFN) as follows: The move to full normalization of trade relations shall be sequenced. In the first stage, Pakistan will transition from the current Positive List approach 110

16 CHAPTER-7 Union Minister for Commerce, Industry & Textiles Shri. Anand Sharma with the Commerce Minister of Pakistan to a Negative List. The consultation process on devising this Negative List is almost complete. A small Negative List shall be finalized and ratified by February, Thereafter, all items other than those on the Negative List shall be freely exportable from India to Pakistan. In the second stage, the Negative List shall be phased out. The timing for this phasing out will be announced in February 2012 at the time the List is notified and it is expected that the phasing out will be completed before the end of trade from both sides. All these items have been allowed duty free passage. Details of these are given in the Box 7.1 India s trade with Pakistan has increased substantially from US$ million in to US$ million in The trend in trade between India and Pakistan is given in Table 7.9: With the entire phasing out of the Negative List, the transition process to MFN treatment shall be complete. Cross LOC Trade from both Salamabad on the Srinagar-Muzaffarabad Highway and Chakkan-dabagh on the Poonch Rawalkot axis from J&K on the Indian side to Chakoti and Rawalkote on the Pakistani side commenced from 21st October, A list of 21 items for trade was approved for 111

17 Annual Report Box : 7.1 LOC Trade Items of export to and import from Pakistan Items for export from the Indian side are: Carpets, Rugs, Wall Hangings, Shawls and Stoles, Namdas, Gabbas, Embroidered items including crewel, Furniture including Walnut Furniture, Wooden Handicrafts, Fresh Fruits and Vegetables, Dry Fruits including Walnuts, Saffron, Aromatic Plants, Fruit bearing plants, Dhania/Moongi/Imli and Black Mushrooms, Kashmiri Spices, Rajmah, Honey, Paper mache Products, Spring Rubberized Coir/Foam Mattresses/Cushion/ Pillows & Quilts and Medicinal Herbs. Items for export from the Pakistan side are: Rice, Jahnamaz and Tusbies, Precious Stones, Gabbas, Namdas, Peshawari Leather Chappals, Medicinal Herbs, Maize and Maize Products, Fresh Fruits and Vegetables, Dry Fruits including Walnuts, Honey, Moongi, Imli, Black Mushroom, Furniture Including Walnut Furniture, Wooden Handicrafts, Carpets and Rugs, Wall Hangings, Embroidered Items, Foam Mattresses, Cushions and Pillows, Shawls and Stoles. Table 7.9 Bilateral Trade with Pakistan (Value in US $ million) Year Exports Imports Total Trade Balance of Trade (April-Oct) (April-Oct) Source: DGCI&S Sri Lanka Sri Lanka has traditionally been an important export market for India. India-Sri Lanka Free Trade Agreement (ISFTA) was signed on 28th December, 1998, which has been in operation since 1st March, Under this Agreement, both countries agreed to phase out trade tariffs from each other within a fixed time frame except for those items in the Negative List of each other. A Joint Study Group (JSG) was set up in April, 2003 to widen the ambit of ISLFTA to go beyond Trade in Goods to include Services and to facilitate greater investment flows between the two countries. Report of JSG was submitted in October, Based on the recommendation and conclusion of the JSG, negotiations for a Comprehensive Economic Partnership Agreement (CEPA) were started in February, 2005 and concluded in July 2008, after 13 rounds. On account of some reservations expressed by Government of Sri Lanka, the Agreement could not be signed then. After a gap of 2 years, both sides resumed discussions on implementation of issues of ISLFTA and agreed to take forward the process of signing a comprehensive agreement for economic cooperation. A Sri Lankan delegation led by Director 112

18 CHAPTER-7 Table 7.10 Bilateral Trade with Sri Lanka (Value in US $ million) Year Exports Imports Total Trade Balance of Trade (April-Oct) (April-Oct) Source: DGCI&S General, Commerce, Sri Lanka visited Delhi on November As a follow up, an Indian delegation led by Joint Secretary, FT (SA) visited Colombo (Sri Lanka) on December 2010 to review outstanding trade issues. Sri Lankan side agreed to provide a revised draft framework for economic cooperation agreement after consultations with the stakeholders. Response from Sri Lankan side has informed that they require some more time for finalization of the draft Chapters. India s trade with Sri Lanka has shown markable increase from US$ million in to US$ million in The trend in trade between India and Sri Lanka is given at Table 7.10 SAARC South Asian Association for Regional Cooperation (SAARC) with India, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka as members was established at the first SAARC Summit held on 4-8 December Afghanistan became its eighth member during the 14th SAARC Summit held in April India, Pakistan and Sri Lanka are categorized as Non-Least Developed Contracting States (NLDCSs) and Afghanistan, Bangladesh, Bhutan, Maldives and Nepal are categorized as Least Developed Contracting States (LDCs). The SAARC Preferential Trading Arrangement (SAPTA) provided a framework for exchange of tariff concessions and also for liberalization in para-tariff and non-tariff measures with a view to promoting trade and economic cooperation among the SAARC member countries. The Agreement on South Asian Free Trade Area (SAFTA) was signed during the Twelfth SAARC Summit held at Islamabad in January 2004 which came into force from 1st January SAFTA, inter alia, prescribes a phased Tariff Liberalization Programme (TLP) according to which all the member states would reduce their tariffs, at the MFN applied rate existing as on 1st January 2006, to zero to five percent within ten years of the agreement coming into force. This TLP would cover all tariff lines except those items kept in the Sensitive List by each country. With the SAFTA Agreement coming into force, there would be no more negotiations under SAPTA. During the fourteenth SAARC Summit held in New Delhi on 3-4 April 2007 India, inter alia, unilaterally announced that India would allow the LDCs of SAARC duty free access to its markets. In pursuance of this, India has reduced its sensitive list for LDCs from 480 to 25 items and zero custom duty has been given to all the items removed from the sensitive 113

19 Annual Report list vide Notification No.99/2011-Customs dated India has thus allowed zero duty access for the SAARC LDCs for almost 99.7% of the total tariff lines. Alcohol and Tobacco items will still face MFN tariff rates, as demerit goods. This measure is expected to help in correction of the trade deficit with India of the SAARC LDCs. Agreement on Multilateral Arrangement on Recognition of Conformity Assessment and the SAARC Agreement on Implementation of Regional Standards were signed at during the 17th SAARC Summit at Maldives in November 6-11, This would promote the mutual recognition of activities of conformity assessment, namely, inspection, testing and certification. The SAARC Agreement on Implementation of Regional Standards would provide a framework as well as the guiding principles for implementation of SAARC standards. These understandings shall pave the way for smoother flow of trade between SAARC members. Agreement on establishing the SAARC Regional Seed Bank signed during the 17 th SAARC Summit meeting will provide regional support to national seed security efforts, address regional seed shortages through collective actions, promote increase of Seed Replacement Rate and act as a regional seed security reserve for the Member States. The Agreement will foster inter-country partnerships in attaining seed security as a means to ensure food security, particularly reducing possible adverse effects of natural calamities. SAFTA Ministerial Council (SMC) consisting of Ministers of Commerce/Trade of the Member States is the highest decision making body of SAFTA and the SMC is supported by a Committee of Experts (COE) with nominees from member states. The Sixth meeting of the SMC and Seventh meeting of COE are scheduled to be held on February 14-16, 2012 at Islamabad in Pakistan. India has developed a web based portal providing The Union Minister for Commerce, Industry and Textiles Shri Anand Sharma with other participants of the SAFTA Ministerial Council (SMC) of SAARC Meeting, at Male, Maldives on June 13,

20 CHAPTER-7 detailed information on current and updated import policies in respect of various products imported into India has since been developed and provides a one stop knowledge base for exporters in the SAARC region exporting different products to India. The portal also called the Compendium is freely accessible at the site address given below:- url: The SAARC Agreement on Trade in Services (SATIS) was signed in the sixteenth SAARC meeting held in April 2010 at Thimpu in Bhutan. This marks the first step in expanding the scope of the SAFTA agreement which is essentially a goods agreement at present. The Ninth meeting of Expert Group on SATIS was held on February 13, 2012 at Islamabad in Pakistan. Negotiations on schedules of specific commitment, including Initial Request List are being held by the Expert Group on SATIS. These negotiations are expected to be completed within next six months. II. Trade with Australia and New Zealand India s trade with Australia and New Zealand showed robust growth in recent years India s trade with Australia and New Zealand since is as follows: Major Commodities of Export & Import Australia The principal commodities of export to Australia are diamonds and diamond jewellery, iron ore, wind power generating sets, refrigerators, cars, Table 7.11 India s Trade with SAARC Countries (April-Oct) Exports (Value in US $ Billion) (April-Oct) India s Total % share of SAARC countries Imports India s Total % share of SAARC countries Source:DGCI&S Box 7.2 Highlights of Trade with SAARC During April-October , Sri Lanka was the largest trading partner of India in SAARC region. During April-October , India has recorded a negative growth rate of exports with Nepal and Pakistan in SAARC region. During April-October , the lowest decline in growth of exports was recorded for Pakistan at (-) 34.93%. Except for Bhutan, India runs a trade surplus with all other trading partners. 115

21 Annual Report Table 7.12 India s trade with Australia and New Zealand (all figures in US$ million) Country (P) (Till October, 2011) Exports Imports Exports Imports Exports Imports Exports Imports AUSTRALIA 1, , , , NEW ZEALAND Total pharmaceutical products, electricity meters etc. Important items of import from Australia are gold, coking coal, copper ores, petroleum and LNG, chickpeas, alumina, wool etc. The top 10 Commodities of exports to Australia during the year (Till October, 2011) and their values (US$ Million) are at Table 7.13 The top 10 Commodities of imports from Australia during the year (Till October, 2011) and their values (US$ Million) are at Table 7.14 Major Commodities of Export & Import New Zealand The principal commodities of exports to New Zealand are parts of aeroplanes/helicopters/air craft engines, light oil and preparation, non-industrial diamonds fluorides of aluminium, Zinc (not alloyed) etc. Important items of import from New Zealand are coal, wood, newsprint in rolls of sheets, apples, aluminium waste & scrap and wool etc. Table 7.13 The top 10 Commodities of exports to Australia S.No. Commodity Values in US $ Million 1 Gems & Jewellary Machinery and Instruments Transport Equipments Drugs,Phrmcutes & Fine Chemls Manufactures of Metals Petroleum (Crude & Products) RMG Cotton Incl Accessories Cotton Yarn,Fabrics,Madeupsetc Inorganic/Organic/Agro Chemls Other Commodities

22 CHAPTER-7 Table 7.14 The top 10 Commodities of imports from Australia S.No. Commodity Values in US $ Million 1 Coal, Coke & Briquittes etc. 4, Gold 1, Metalifers Ores & Metal Scrap 1, Petroleum, Crude & Products Non-Ferrous Metals Wool, Raw Pulses Machinery Except Elec & Electronic Fertilezers Manufactured Electronic Goods The top 10 Commodities of exports to New Zealand during the year (Till October, 2011) and their values (US$ Million) are at Table 7.15 The top 10 ten Commodities of imports from New Zealand during the year (Till October, 2011) and their values (US$ Million) are at Table 7.16 Table 7.15 The top 10 Commodities of exports to New Zealand S.No. Commodity Values in US $ Million 1. Drugs, Pharmaceuticals & Fine Chemicals Machinery and Instruments Transport Equipments Inorganic/Organic/Agro Chemicals Gems & Jewellery Other Commodities Manufacturers of Metals Plastic & Linoleum Products RMG Cotton Inc. Accessories Cotton Yarn, Febrics, Madeupsetc

23 Annual Report Table 7.16 The top 10 ten Commodities of imports from New Zealand S.No. Commodity Values in US $ million 1. Wood and Wood Products Coal, Coke &Briquittes etc Milk and Cream Newsprint Machinery except Elec. & Electronic Metalifers Ores &MetalScrap Wool, Raw Fruits & Nuts excl. Cashew nuts Gold Other commodities 7.14 Trade Agreements After the approval of Trade and Economic Relations Committee on , India and Australia started negotiations for a Comprehensive Free Trade Agreement (FTA). Two rounds of negotiations between the two countries have been held in July, 2011 and November, Exchange between the two countries so far has been of a preliminary nature. The Third Round is expected to take place in New Delhi in March, India and New Zealand have started negotiations for a Comprehensive Economic Cooperation Agreement (CECA). Seven rounds of negotiations have been held so far. Both the countries have since exchanged offers, requests as well as revised offers in the Goods Sector and are looking forward to exchanging the services offers simultaneously The Union Minister for Commerce, Industry and Textiles Shri Anand Sharma with the Prime Minister of Australia, Ms. Julia Eileen Gillard, in Canberra, Australia on May 12,

24 CHAPTER-7 in Round Eight. In the other areas, varying parts of Chapter texts have been cleaned up. Both the countries expect to conclude the CECA by the end of financial year The Eighth Round of negotiations with New Zealand is expected to be held in March, Foreign Direct Investment Total Foreign Direct Investment inflows from Australia from April, 2000 to November, 2011 are US$ million. Total Foreign Direct Investment inflows from New Zealand from April, 2000 to November, 2011 are US$ million. III. Trade with North America Free Trade Agreement (NAFTA) The FT (NAFTA) Division deals with India s bilateral trade with United States of America, Canada and Mexico. All the three countries are signatories to the North America Free Trade Agreement (NAFTA) (signed in 1994) and form one of the largest and the most important trading blocks of the world. This Division regularly engages with all the three countries to discuss and resolve bilateral trade related issues of concern. The trade data of NAFTA countries is analysed for identification of important trends and opportunities for our exporters for expansion and consolidation of exports. The various legislations/steps taken by these countries and the possible impact of these measures on Indian exports are analyzed and follow up action is taken in consultation with other Ministries/Departments and our Missions abroad. This Division coordinates dissemination of trade related information with respect to NAFTA countries with the Apex Chambers of Commerce and Export Promotion Councils (EPCs). Member exporters of Apex Chambers of Commerce and EPCs are provided assistance for participation in fairs/exhibitions, identification of export products and potential market areas for exports, details of reputed buyers etc. The difficulties faced by Indian exporters in NAFTA countries are regularly taken up with the authorities concerned of these countries through correspondence, video conferences and bilateral meetings. Details regarding India s bilateral trade with the countries of NAFTA region are given below: India-US Bilateral Trade In USA was one of the India s largest trading partners and export destinations. The bilateral trade figures for the years , , and (April to September) are given in Table The major items of export from India to the US are gems and jewellery, drugs, pharmaceuticals and fine chemicals, RMG Cotton including accessories, manufactures of metals, machinery and instruments, etc. The major items of import from USA to India are machinery (except Electric & Electronic), transport equipments, pearls, precious and semiprecious stones, electronic goods, gold, etc. India-US Commercial Dialogue The TOR of the India US Commercial Dialogue was signed on March 23, The dialogue is an institutional arrangement between US Department of Commerce and India s Department of Commerce and is aimed at facilitating trade and maximizing investment opportunities across a broad range of economic sectors, including IT, infrastructure, biotechnology and services. Issues taken up for discussion under the Commercial Dialogue are in the four broad categories: (a) exchange of information on standards, (b) exchange of information on antidumping/ trade defence mechanisms, (c) exchange of information on IPR and (d) focus on Small and Medium Enterprises. The Commercial Dialogue arrangement is reviewed every two years. While renewing the Dialogue in 2010, India has placed greater emphasis on investment 119

25 Annual Report Table 7.17 India-US Bilateral Trade (Value in US $ million) Year Exports Percentage Growth Imports Percentage Growth Trade balance , , (+)2, , , (+)2, , , (+) (P) (April- September) 16, , (+)5, opportunities in both countries especially in manufacturing and in areas of high technology, emerging technologies and collaborative research. During the year 2011, two meetings of Commercial Dialogue were held between Commerce Secretary and Under Secretary Sanchez of the US Department of Commerce. The first meeting took place on 17 th March, 2011 and the second on 8 th November, Business to Business (B2B) interaction was also held as a part of Commercial Dialogue in November, The theme of the Business to Business (B2B) interaction was sharing of Best Practices on promoting Safe and Environmentally Friendly Cold Chain/Supply Chain Technology and Investment Opportunities. India-US Trade Policy Forum India-US Trade Policy Forum (TPF), announced during the visit of Prime Minister Dr. Manmohan Singh to the US in July, 2005, is a part of the overall Strategic Dialogue between India and the United States and is designed to expand bilateral trade and investment relations between India and the United States. The TPF is co-chaired by the Minister of Commerce & Industry and the United States Trade Representative. Discussions under the TPF were earlier structured around five focus groups: Tariff and Non-Tariff Barriers; Agriculture; Investment; Services; Innovation and Creativity. Ministerial meeting of the TPF was last held in Washington DC on 21 st September During the meeting, all the focus groups under the TPF, held comprehensive discussions on a wide range of issues and, identified areas for future constructive engagement between the two trading partners. Since then the approach based on fixed focus group has been modified to an approach based adhoc groups to be set up as required. A Private Sector Advisory Group (PSAG) was formed in April 2007 as an adjunct to the TPF to provide the TPF with views and advice from non-government trade and investment experts. The PSAG members offer recommendations and policy suggestions, and inject new ideas into the TPF dialogue. During the last TPF meeting, PSAG decided to undertake studies in sectors like technology trade, urban infrastructure etc. The studies are expected to come up with specific recommendations for increasing bilateral trade and augmenting investment flows in both directions. India-Canada Bilateral Trade Bilateral trade figures between India and Canada from to the current year are given below. The major commodities of export to Canada are drugs, pharmaceuticals and fine chemicals, RMG cotton including accessories, manufactures of metals, gems and jewellery, machinery and instruments etc. The major items of import from Canada are pulses, fertilizers manufactured, newsprint, transport equipments, machinery 120

26 CHAPTER-7 Table 7.18 India-Canada Bilateral Trade (Value in US $ Million) Year Exports Percentage Growth Imports Percentage Growth Trade balance , , , , , (P) (April- September) (except electrical and electronic), pulp and waste paper etc. India Show in Canada Engineering Export Promotion Council (EEPC) India organised India Show Canada in Toronto during October, Commerce Secretary led an Indian delegation to participate in the Show. India-Canada Trade Policy Consultation The seventh India-Canada Trade Policy Consultation was held on 18 th October, 2010 in New Delhi. Both sides noted the significant growth in bilateral trade between Canada and India in the recent years, as well as the need to further strengthen this relationship whose potential remains largely untapped. A number of issues of concern between the two countries were discussed during the meeting. India Canada CEPA India and Canada have been working to enhance bilateral cooperation in a number of areas of mutual importance and are pursuing bilateral relations through mechanisms like Foreign Office Consultations and Trade Policy Consultation. Both the countries have commenced negotiations towards a Comprehensive Economic Partnership Agreement (CEPA). Three rounds of negotiations have already taken place. Third round of CEPA negotiations between India and Canada was held in New Delhi from December, During this round separate discussions were held on Services (Trade in Services), Sanitary and Phytosanitary issues (SPS), Rules of Origin, Services (MoNP), Technical Barriers to Trade (TBT), Financial Services, Telecommunications and Trade facilitation. India-Mexico Bilateral Trade Bilateral trade figures between India and Mexico from to the current year are given below. The major commodities of export to Mexico are transport equipments, drugs, pharmaceuticals & fine chemicals, electrical goods, RMG cotton including accessories, manmade yarn, fabrics, madeups, inorganic/organic/agro chemicals, etc. The major commodities imported from Mexico are petroleum (crude and products), electronic goods, fertilizers manufactured, transport equipments, iron and steel etc. India Mexico BHLG A Memorandum of Understanding (MOU) was signed between India and Mexico on 21 May, 2007 at New Delhi by Minister of Commerce and Industry and Minister of Economy, Mexico for the establishment of a Bilateral High Level Group (BHLG) on Trade, Investment and Economic Cooperation. This MOU envisages establishing a Bilateral High Level Group (HLG) on Trade, Investment and Economic Cooperation that shall meet once a year alternately in each country. The functions 121

27 Annual Report Table 7.19 India-Mexico Bilateral Trade (Value in US $ million) Year Exports Percentage Growth Imports Percentage Growth Trade balance , , (P) (April- September) of the HLG mainly include promoting bilateral cooperation, maintaining liaison in the economic, commercial, technical and other related fields and information exchange. Under the BHLG six Working Groups have been created (i) Trade Promotion (ii) Investment Promotion (including infrastructure) (iii) Custom Cooperation (iv) Services Promotion (v) Tourism Promotion and (vi) Industrial dialogue with private sector participation ( Chemical-Pharma, Textiles and Bio-fuels sectors.) The second meeting of the BHLG was held in Mexico City on April 22 23, The meeting was co-chaired by Commerce Secretary on the Indian side and Vice Minister for Foreign Trade, Ministry of Economy on the Mexican side. Bilateral issues of concern on trade and investment were discussed during the meeting under all the six working groups. The meeting also identified future areas of cooperation for expanding the trade and investment relationship between the two countries. IV. Trade with Europe The European Union (EU) presently consists of 27 countries viz. Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden and U.K. Trade with the EU represents almost % of India s total trade. EU as a bloc is thus India s largest trading partner. The relationship between the European Union and India has matured substantially in recent years, from that of an aid donor-recipient, to one of partnership with opportunities for mutual benefit. The EU and India, as the two largest democracies in the world and global actors in a multi-polar world, today share a strategic partnership, of which commercial interaction forms a key component. The frequency and intensity of India s contacts with the EU have grown exponentially since India s engagement with EU in trade in goods has increased by more than four times between 2000 and India and the EU have enjoyed healthy economic relations. These relations have been built on the foundations of (i) Cooperation Agreement between European community and India on Partnership and Development - 20th December, 1993 (ii) Agreement on Scientific and Technological Cooperation, 2001 (renewed in 2007), (iii) Agreement on Customs Cooperation, 2004, (iv) EU-India Horizontal Civil Aviation Agreement, 2008, (v) Agreement on nuclear fusion energy research, 2009, (vi) Joint declaration on Culture in December, India also has bilateral framework Agreements with a number of individual EU countries in areas of trade, investment and avoidance of double taxation. India has agreements for investment promotion 122

28 CHAPTER-7 and protection within 28 countries of Europe, including 16 countries of EU. Similarly, agreements for avoidance of double taxation exist with 28 countries of Europe, including 20 countries of EU. India-EU bilateral relations are periodically reviewed at the official level by the India-EC Joint Commission, which held its last meeting on 29th September, 2010 at Brussels. Three Sub-Commissions on Trade, Economic Cooperation and Development Cooperation and seven Joint Working Groups on agriculture and marine products, textiles, steel, food processing industries, pharmaceuticals & biotechnology, Customs Cooperation and technical barriers to trade (TBT)/sanitary and phyto sanitary (SPS) issues are functioning. In 2011, the meetings of Sub Commission on Trade, Sub Commission on Economic Cooperation and Sub Commission on Development Cooperation were held on , and respectively. The eleventh India-EU Summit was held on 10th December, 2010 at Brussels. India s trade with the EU is hampered by sanitary and phytosanitary standards, technical barriers, complex system of quota/tariff, anti-dumping/ anti-subsidy measures against Indian products etc. These issues which have a bearing on market access for India s exports to the EU are regularly taken up in the Joint Working Groups and the Sub- Commission on Trade. The EU market has stringent quality norms and standards. Indian trade and industry also needs to meet these norms to increase the market share of Indian products in EU. Issues affecting trade with individual European countries are also taken up at the bilateral fora in the form of Joint Commissions. This continuous dialogue helps in creating an environment for enhancing bilateral trade and investment flows. During the year 2011, Joint Commission meetings were held with Belgium & Luxembourg (from among Member States). The 21st India-EU Joint Commission meeting was held on 6th January, 2012 at New Delhi. INDIA EU BTIA Negotiations In order to deepen and strengthen trade and investment relations between India and the EU, negotiations are currently underway for a Broad based Trade and Investment Agreement. In September, 2005, the 6 th India-EU Summit held in New Delhi decided to establish a High-Level Trade Group (HLTG) to explore ways and means to widen and broaden the economic relationship and explore possibility of a trade and investment agreement. In October, 2006, the HLTG presented its report to the 7th India EU Summit at Helsinki. The summit decided that the two sides should enter into negotiations for the trade and investment agreement. Thirteen rounds of negotiations have been held. The first round was held on 28 th -29 th June 2007 at Brussels and the 13th round was held from 31st March to 6th April, 2011 in India. This agreement will lead to an increase in the opportunities for market access in both goods and services for both sides. Trade and Investment Relations with European Union The European Union (EU) presently consists of 27 countries viz. Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden and U.K. Besides, there is also a bloc of EFTA countries comprising of Switzerland, Norway, Iceland and Liechtenstein. Turkey, Albania, Croatia, Bosnia and Herzegovina, Macedonia, Serbia while considered part of Europe Division, are neither a member of the EU nor EFTA blocs. European Countries accounted for about 19.63% of India s total trade during During 123

29 Annual Report (April October), India s trade with Europe increased by 35.6% as compared to the corresponding period in with exports increasing by 33% and imports by 37.3%. The top five items of India s exports to Europe during the period were petroleum (crude & products), readymade garments cotton including accessories, transport equipment, gems & jewellery, electronic goods. The top five items of India s imports from Europe were gold, machinery (except Electrical & Electronics), pearls/precious & semi-precious stone, electronic goods and transport equipment. Trade between India and Europe during the last five years is at Table 7.20: Table 7.20 Trade with Europe (Value in US $ million) Year Exports Growth rate (%) Imports Growth rate (%) Total Trade Balance of Trade (-) (-) , (-) (-) (-) (-) (-) (April-Oct.) (-) (April-Sept.)* (-)19862 * Provisional Source: DGCI&S India Show Engineering Export Promotion Council (EEPC) organised India Show at the WIN Fair in Istanbul on 3-6 February 2011 with partner country status to promote Brand India for Indian products, Technologies and Services. More than 150 companies participated in the fair. During the BASELWORLD Fair - a world class watch and jewellery show, an India Show was organised in Basel, Switzerland during March, In order to strengthen the trade and investment relations with the European Free Trade Association (EFTA) countries comprising Switzerland, Liechtenstein, Norway and Iceland (non-eu member countries in Europe), an India-EFTA Joint Study Group (JSG) was established in December, 2006 to take a comprehensive view of bilateral economic linkages, covering among others, trade in goods and services, investment flows, and other areas of economic cooperation and to examine the feasibility of a bilateral broad based trade and investment agreement. The JSG recommended commencement of negotiations for a Broad based Trade and Investment Agreement (BTIA). Based on this, the negotiations commenced in October, Continuing with the efforts of the previous years to strengthen the trade and investment relations with EFTA countries, ten rounds of negotiations have been held so far. The last round of negotiations was held during 30 November 2 December, 2011 during which Trade in Goods, Services, Investment, IPR (Intellectual Property Rights), Customs and Trade Facilitations, Rules of Origin, Sanitary and Phyto-sanitary Measures(SPS), Technical Barriers to Trade(TBT), Trade Defence, Dispute Settlement, Competition, Sustainable Development, Legal and Institutional provisions were discussed. 124

30 CHAPTER-7 Table 7.21 Trade with EFTA countries (Value in US $ million) Year Exports Growth rate (%) Imports Growth rate (%) Total Trade Balance of Trade , , (-)9, , , (-)10, , , (-)12, , , (-)14, , , (-)24, (April- Oct.) (April Oct.)* * Provisional Source:DGCI&S (-) (-)19, India s trade with EFTA countries has increased from US$ 10,581 million in to US$ 26,708 million in , with average annual growth rate of 38% during the last four years. The 6 th Session of India-Greece JEC was held in Athens on March MoS (C&I) co-chaired the meeting with Greek Deputy Minister of Foreign Affairs Mr. Spyros Kouvelis. The issues of mutual interests ranging from cooperation in the areas of tourism, agriculture, shipping, aviation, IT, food processing, etc. were discussed besides looking for ways to promote investment in various sectors. The 17 th Session of India and Finland Joint Commission on Economic Cooperation was held at New Delhi on 24 th November The progress in setting up of Joint Working Groups on Innovation, Clean Technology and Waste Management and Skill Development Training was reviewed. The bilateral cooperation in the area of New and Renewable Energy, IT, Textile, Investment etc. was also discussed in the meeting. First meeting of India-Finland Joint Working Group (JWG) on Innovation:- In pursuance to CIM s announcement during his Finland visit in March, 2010, the India-Finland JWG on Innovation was set up and 1st meeting of the JWG was held on 27th September, 2011 at New Delhi. The 17 th Session of India-Romania Joint Commission was held on 1-2 February 2012 at Bucharest, Romania. The Indian delegation was led by Hon ble Minister of State, Shri Jyotiraditya M. Scindia. This JEC being held after eight long years is an effort to revive and create ties with Romania and the Romanian people in not only areas of economic interest, but also in term of people to people contact. Discussions were held for cooperation in the areas of Transport and Infrastructure Development, Banking, Science and Technology, Textile, IT and ITES, Tourism etc. V. Trade with Commonwealth of Independent States (CIS) The Commonwealth of Independent States (CIS) comprises the Russian Federation, Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan (the last 5 countries jointly referred to as the Central Asian Republics). Bilateral trade with these countries is as shown in the graph below: 125

31 Annual Report The CIS region had a share of 1.14 per cent in India s exports and 1.53 per cent in its imports during The principal commodities of exports to the region include drugs and pharmaceuticals & fine chemicals, machinery and instruments, tea, coffee, transport equipments, RMG cotton including accessories, manufactures of metals etc. Important items of imports to India from this region are iron and steel, fertilizers, non-ferrous metals, petroleum, crude & products, silver, synthetic & reclaimed rubber, vegetable oils, newsprint, project goods, crude minerals, inorganic chemicals, metalifers ores and metal scrap etc. a) Russian Federation The Russian Federation, constituting a major portion of the former USSR, continues to be India s most important trading partner in the region accounting for about 60% of India s total trade with CIS region in During , following meetings were held to discuss various issues concerning bilateral cooperation: Chart 7.5 Bilateral trade with CIS region Table 7.22 Trade with CIS (Value in US$ Million) Year Export Import Total Trade %Growth (+) (+) (-) (+) (Apr-Sep) (+) (Apr-Sep) Provisional (-) 1.00 (Source: DGCI &S) 126

32 CHAPTER-7 17th Session of the Indo-Russian Inter- Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation was held on 18th November, 2011 at Moscow under the Co-Chairmanship of Shri S.M. Krishna, Minister of External Affairs from the Indian side and Mr. Sergei Borisovich Ivanov, Deputy Chairman of the Russian Federation Government from the Russian side. 5th Session of India-Russia Forum on Trade & Investment was held on 10 th November, 2011 at Moscow, under the Co- Chairpersonship of Shri Anand Sharma, Minister of Commerce, Industry & Textile from the Indian side and Mr. Sergei Borisovich Ivanov, Deputy Chairman of the Russian Federation Government from the Russian side. 17 th Session of the India-Russia Working Group on Trade & Economic Cooperation under the aegis of the Indo-Russian Inter- Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation was held on 3 rd & 4 th October 2011 at Moscow under the Co- Chairmanship of Shri Ravi Capoor, Joint Secretary, Department of Commerce from the Indian side and Mr. S. V. Chernyshev, Director of the Department of the Countries of Asia and Africa, Ministry of Economic Development of the Russian Federation from the Russian side. b) Central Asian Republics Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, constitute the five Central Asian Republics in the CIS region. Department of Commerce is the nodal Department for the Inter- Governmental Commission (IGC) with Kyrgyzstan, Tajikistan and Uzbekistan. During , following events were held: 9 th Meeting of India-Kazakhstan Inter- Governmental Commission on Trade, Economic, Scientific, Technological, Industrial and Cultural Cooperation was held on 12 th October, 2011 in Astana, Kazakhstan under the co-chairmanship of H.E. Mr. R.P.N. Singh, Minister of State for Petroleum & Natural Gas from Indian side and H.E. Mr. Sauat Mynbayev, Minister of Oil & Natural Gas of the Republic of Kazakhstan from Kazakhstan side. 6th Session of India-Tajikistan Joint Commission on Trade, Economic, Scientific and Technical Cooperation was held from 16-17th May, 2011 in Dushanbe, Tajikistan under the co-chairmanship of Shri P.K. Chaudhery, Special Secretary, Department of Commerce from Indian side and Mr. Farrukh Hamraliev, Minister of Economic Development & Trade of the Government of Tajikistan from Tajikistan side. 9th Session of India-Uzbekistan Inter Governmental Commission on Trade, Economic, Scientific and Technical Cooperation was held on 4th May, 2011 in Tashkent, Uzbekistan under the cochairmanship of Shri. P.K. Chaudhery, Special Secretary, Department of Commerce from Indian side and Mr. D. Turdiev, 1st Deputy Minister, Minister of Economic of the Republic of Uzbekistan from Uzbek side. Other CIS Countries Other six CIS countries are Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Ukraine 127

33 Annual Report is India s second largest trading partner of the CIS region accounting for about 27% of India s total trade with CIS region in Department of Commerce is the nodal Department for the Inter- Governmental Commission (IGC) with Azerbaijan. During , following events were held: 5th Session of India-Armenia Inter Governmental Commission on Trade, Economic, Scientific and Technological, Cultural and Educational Cooperation was held from 31st October-1st November 2011 in Yerevan, Armenia under the co-chairmanship of Shri. Sanjay Singh, Secretary (East), Minister of External Affairs from Indian side and Mr. Sergey Manassarian, Deputy Minister, Ministry of Foreign Affairs, Republic of Armenia from Armenian side. Trade Promotion and other Activities Focus: CIS Programme launched in now covers all the CIS countries. The programme seeks to increase interaction between the business entities of the two regions by identifying areas of bilateral trade and investment. The focus is on major product groups/ services for raising India s exports to this region. The exports to the region are to be enhanced through combined efforts of various institutions of the Government of India and various Trade Promotion Organizations. There is a regular exchange of delegations with CIS countries through participation in trade fairs of mutual interest and exchange of trade related information. Bilateral trade and economic cooperation between India and these countries is regularly reviewed through the meetings of Joint Commissions / Working Groups and Joint Business Councils. There is a regular interaction at the Governmental level for enhancing bilateral trade and economic cooperation. Inter Governmental Commission/Joint Commission - with CIS Countries under Department of Commerce India-Azerbaijan Inter Governmental Commission on Trade, Economic, Scientific & Technological Cooperation under the Co-Chairmanship of Minister of State for Commerce and Industry. India-Kyrgyzstan Inter Governmental Commission (IGC) on Trade, Economic, Scientific & Technological Cooperation under the Co-Chairmanship of Minister of State for Commerce and Industry. India-Uzbekistan Inter-Governmental Commission (IGC) on Trade, Economic, Scientific & Technical Cooperation under the Co-Chairmanship of Minister of State for Commerce and Industry. India-Tajikistan Joint Commission on Trade, Economic, Scientific & Technical Cooperation under the Co-Chairmanship of Commerce secretary. VI. Trade with Latin American and Caribbean Countries FT (LAC) Division in Department of Commerce handles general trade and other allied matters with countries of the Latin America and Caribbean region. Traditionally, relations between India and the countries of Latin America have remained close and cordial. However, commercial relations have not grown commensurately. The main reasons affecting our trade with this region are: distance, language barriers, lack of information and the absence of direct shipping and air links. 128

34 CHAPTER-7 The Latin American and Caribbean (LAC) region comprises 43 countries and accounted for 5.68% of the total world trade in There is significant scope for enhancing trade between India and the LAC region. Over the years, our exports have been showing a continuously increasing trend as indicated below: Trade with the LAC Region The total Indian bilateral merchandise trade with the region increased from a modest US$ 1.97 billion in to US$ billion in During this period total Indian exports to the region grew from a modest US$ million to US$ billion, a growth of about % over these ten years. Similarly our imports grew from about US$ 1.01 billion to US$ billion over this period, a growth of about 1312%. The percentage share of India s exports to Latin America in its global exports has increased from 2.19% in to 4.08% in In the same period, the percentage of India s imports from Latin America in its global import has increased from 1.96% to 3.84%. India s region wise export growth for indicates that Latin America is at third place (after CIS and Southern Africa) with an impressive growth of 64.81%. Three product groups viz. textiles, engineering products and chemical products constitute nearly half of India s exports to the region in In the Textiles Sector, readymade garments, made-ups, fabrics, yarn, carpets, handicrafts etc. are fast moving export items. In the Engineering Sector, automobiles, auto components, electrical appliances, machinery, computer software etc. have good export potential. In Chemical Products Sector, bulk drugs, pharmaceuticals, dyes and intermediates, agrochemicals, plastic products, naphtha, resins, essentials oils, molasses and tyres for automobiles & bicycles are the important items. Focus: LAC Programme An integrated programme Focus: LAC was launched in November, 1997 which has been extended upto March 2014 in order to consolidate the gains of the previous years and significantly enhance India s trade with the LAC region. The Focus LAC programme aims at focusing on the Latin American region, with added emphasis on the major trading partners of the region. The main objective of the programme is to increase interaction between the two regions by identifying potential areas of bilateral trade and investments. Table 7.23 India s Trade with LAC Region Year India s exports to LAC % growth of exports India s import from LAC 129 % growth of imports Balance of trade (Values in US$ million) Total trade , , , , , , , , , , , , , , , , , , , , , (Apr- Oct.) 7, , , , (Source: DGCIS, Kolkata)

35 Annual Report S.N. Table 7.24 (a) Major commodity groups of India s exports to LAC & Commodity Apr 2009-Mar 2010 Apr 2010-Mar 2011(P) (Values in US $ Million) % Growth 1. Petroleum (crude & products) 1, , Transport equipments , Drugs,phrmcutes & fine chemls Manmade yarn,fabrics,madeups Machinery and instruments Inorganic/organic/agro chemls Cotton yarn,fabrics,madeups etc Plastic & linoleum products Prmry & semi-fnshd iron & steel Electronic goods Various incentives and export promotion measures have been designed and incorporated in this programme. In the Foreign Trade Policy announced in 2009, Latin America has been given special focus to diversify our trade basket and offset the inherent disadvantages for our exporters such as credit risk, higher freight cost etc. Under the new FTP ( ), Double Weight Scheme for exports to all countries of LAC will continue. 16 new markets of LAC region have been incorporated under Focus Market Scheme (FMS). Thus, the total countries of LAC region now covered by the FMS are thirty one (31). Under the Market Linked Focus Product Scheme (MLFPS), 13 markets have been identified, which includes Brazil. With a view to increase the competitiveness of Indian exports, Special FMS was introduced in Table 7.24 (b) Major commodity of India s exports to LAC (April- Oct) (Values in US $ Million) S.No. Commodity Apr-Oct 2010 Apr-Oct 2011(P) %Growth 1. Petroleum (Crude & Products) 2, , Transport Equipments Plastic & Linoleum Products Drugs, Phrmcutes & Fine Chemls Machinery and Instruments Manmade Yarn, Fabrics, Madeups Inorganic/Organic/Agro Chemls Cotton Yarn, Fabrics, Madeups etc Rmg Cotton Incl Accessories Manufactures of Metals

36 CHAPTER-7 S.N. Table 7.25 (a) Major commodity of India s imports from LAC & Commodity Apr 2009-Mar 2010 Apr 2010-Mar 2011(P) (Values in US $ Million) %Growth 1. Petroleum, crude & products 5, , Metalifers ores & metal scrap 1, , Vegetable oils fixed (edible) , Sugar 1, Electronic goods Iron & steel Machinery except elec & electronic Organic chemicals Transport equipments Wood and wood products (Source: DGCIS, Kolkata) Table 7.25 (b) Major commodity of India s imports from LAC and (April-Oct) (Values in US $ Million) S.No. Commodity Apr-Oct Apr-Oct (P) %Growth 1. Petroleum, crude & products 5, , Metalifers ores & metal scrap , Vegetable oils fixed (edible) Electronic goods Gold , Machry excpt elec & electronic Wood and wood products Iron & steel Transport equipments Inorganic chemicals October, 2011 by this Department, which allows total duty credit Under this Special FMS, twelve (12) countries of the LAC region are included. Cuba and Mexico are new entrants in this category. Brazil, Venezuela, Bahamas, Mexico, Chile, Argentina, Colombia, Peru, Ecuador and Panama are India s top ten trading partners constituting approximately 95.4% of the total trade with the region in Institutional Mechanism The following institutional arrangements exist with regard to the countries of the Latin American region: 131

37 Annual Report (i) (ii) Indo-Argentine Joint Commission Indo-Argentine Joint Trade Committee (iii) Indo-Mexican Joint Commission (iv) Indo-Brazilian Commercial Council (v) Indo-Cuban Joint Commission (vi) Indo-Cuban Trade Revival Committee (vii) Indo-Suriname Joint Commission (viii) Indo-Guyana Joint Commission (ix) Indo-Venezuela Joint Commission (x) India Brazil Trade Monitoring Mechanism (xi) India Trinidad Tobago Joint Commission In order to have increased frequency of interaction with important trading partners in the LAC region, efforts are made to hold the meetings of the Joint Commissions on a regular basis. Commercial Staff in the Indian Missions At present, Indian Missions are functioning in 14 major countries in the LAC region. Recently, full fledged commerce posts have been sanctioned by this Department for the Indian Embassy at Brasilia, Buenos Aires (Argentina), Santiago (Chile), Bogota (Colombia) and Mexico City (Mexico) in different capacities to exclusively manage trade related matters and to respond queries of exporters and importers interested to undertake business with Latin America and vice versa. These posts are in addition to the existing 10 posts of Marketing Assistant operating in nine Indian Missions in the LAC region ( EOI Argentina has two sanctioned posts of such Marketing Assistants). Efforts are being made to further strengthen these Missions for commerce and trade. Sponsoring of Trade Delegations/ Organising Seminars/ Conferences/ Trade Fairs/ Exhibitions The CII, FICCI, and Export Promotion Councils (EPCs) are sponsoring trade delegations for promotion of trade with the region, as also organizing seminars/ conferences and sector/ product specific seminars in different cities for the benefit of exporters and to sensitise them about the trade opportunities available in the LAC region. Vigorous efforts are also made to ensure participation by EPCs, etc. in trade fairs to be held in Latin American countries, since trade fairs act as an important tool for trade promotion. Progress during i) Implementation of India-Chile PTA A preferential Trade Agreement (PTA) between India and Chile was signed on March 8, The said PTA came into force with effect from August, Under this PTA, India has offered tariff preferences on 202 tariff lines (as per 2007 HS ) at the 8 digit level to Chile with margin of preference (MoP) ranging from 10%- 50% and Chile has offered tariff preferences on 296 tariff lines to India at the 8 digit level with MoP ranging from 10%- 100%. With the objective to gain optimal benefits and boost up bilateral trade between two countries, the expansion of India-Chile PTA is currently in progress. ii) India-MERCOSUR PTA A Preferential Trade Agreement (PTA) between India and MERCOSUR (a trading bloc of Argentina, Brazil, Paraguay and Uruguay in South America region) was signed on 25th January, 2004 and annexes to this Agreement were incorporated on March 19, Through this PTA, India and MERCOSUR have agreed to give tariff concessions ranging from 10% to 100% to each other on 450 and 452 tariff lines respectively. India- MERCOSUR PTA came into operation from 1 st June, The process of expansion of India-MERCOSUR is currently in progress with the objective to enhance benefits from the Agreement through higher trade coverage. 132

38 CHAPTER-7 ECGC Cover The Export Credit Guarantee Corporation of India (ECGC) periodically undertakes a comprehensive grading of countries based on the methodology of risk scoring. As per ECGC Country Risk and Cover Policy on LAC region (reviewed as on ) sixteen (16) Latin American countries have been placed in low risk categories of A1 and A2. No country has been placed in very high-risk category of D. Lines of Credit EXIM Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries, to import goods and services from India on deferred credit terms. The Indian exporters can obtain payment of eligible value from EXIM Bank, without recourse to them, against negotiation of shipping documents. LOC is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool. The EXIM Bank has currently extended fourteen lines of credit to banks/governments in the LAC region as given in Table 7.26 (as on ): Committee on LAC A Committee has been constituted under chairmanship of Hon. MoS (Commerce & Industry), Government of India, to recommend a long term strategy for proactively engaging with LAC. Finalization of the report of the Committee is in progress. Document on Government policies for acquisition of land/ resources in LAC Government in consultation with its Latin America partners is actively looking at evolving policies for joint development of natural resources for the benefit of both sides. Private sector stakeholders have also been consulted. Important trade promotion events in LAC (i) (ii) Business Seminars were organized by FICCI in Argentina and Uruguay in May, 2011 coinciding with visit of Hon. MoS (Commerce & Industry). Business Seminars were organized by EEPC India in association with other industry/ trade associations in Colombia and Panama during Aug- Sept, 2011 coinciding with visit of CS. (iii) Telecom Equipment and Services EPC (TEPC) participated in Futurecom held from Sept, 2011 in Sao Paulo ( Brazil). VII. Trade with Countries in Sub Saharan Africa (SSA) Region Since independence India has had cordial and friendly trade relations with countries in Sub- Saharan Africa (SSA) Region, consisting of Eastern, Western, Central and Southern Africa. India s trade with SSA Region since is given in the table below: Total trade with countries in SSA Region during amounted to US$ 42, million with exports amounting to US$ 1, million and imports at US$ million. The total provisional trade during April-September, 2011 has been US$ million with exports at US$ million and imports amounting to US$ million. The corresponding figures during April-September 2010 were US$ million (total trade), US$ million (exports) and US$ million (imports) respectively. Bilateral trade with West African countries was US$ 17, million during as compared to US$ million during

39 Annual Report Table 7.26 The EXIM Bank lines of credit (As on ) S. No. Borrower Amount of Credit Purpose Tenor 1 Banco de Comercio Exterior de Colombia S.A. (Bancoldex), Colombia 2 Corporacion Andina de Fomento (Andean Development Corporation) (covering Bolivia, Colombia, Ecuador, Peru and Venezuela) USD mn (Years) General purpose Upto 5 years General purpose Tranche A: Upto 5 years Tranche B: Upto 2 years 3 Banco Bradesco S.A., Brazil General purpose Tranche A: Upto 5 years Tranche B: Upto 2 years 4 Republic Bank Ltd., Trinidad & Tobago 8.00 General purpose Upto 5 years 5 Government of Suriname General purpose Upto 15 years 6 Government of Guyana Cricket stadium in Georgetown 7 Government of Honduras Communication, Health, Transport and Air Force Components from India to Honduras Upto 20 years Upto 20 years 8 Government of Guyana 2.10 Signaling System Upto 20 years 9 Government of Jamaica 7.50 Export of water pumps Upto 12 years 10 Government of Suriname Water supply project Upto 15 years 11 Government of Suriname Purchases from BEL,HAL and Ordnance Factory Board 12 Government of Suriname 4.30 Supply of ten crash fire tenders 13 Government of Suriname 5.76 Purchase of Helicopters from HAL 14 Government of Guyana 4.00 Fixed and movable irrigation pumps Upto 15 years Upto 15 years Upto 15 years Upto 20 years 10. Drugs, pharmaceuticals & fine chemicals, transport equipments, machinery and instruments, electronic goods, petroleum (crude and products), manufactures of metals were the major items of export. Petroleum, crude and products, cashew nuts, metalifers ores and metal scrap, wood and wood products, inorganic chemicals and fertilizers and crude were the major items of import. Nigeria was the top most trading partner within this region with a trade of US$ 13,046 million during Bilateral trade with countries in Southern Africa was US$ million during as compared to US$ million during Transport equipments, petroleum crude and products, drugs, pharmaceuticals and fine chemicals, machinery and instruments, electronic goods, manufactures of metals, plastic and linoleum products, primary and semi finished iron and steel were the major items of export. Petroleum crude and products, gold, coal, coke and briquittes etc, metalifers ores 134

40 CHAPTER-7 and metal scraps, inorganic chemicals, non-ferrous metals, iron and steel were the major items of import. South Africa was the top most trading partner within this region with a trade of US $ 11,125 million during Bilateral trade with countries of East Africa was US$ million during as compared to US$ million during Petroleum crude and products, drugs, pharmaceuticals & fine chemicals, machinery and instruments, primary and semi finished iron and steel, sugar and transport equipments were the major items of export. Cashew nuts, pulses, metalifers ores and metal scrap, inorganic chemicals, leather and spices were the major items of import. Kenya was the top most trading partner within this region with a trade of US $ 2,411 million in Bilateral trade with countries of Central Africa was US $ million during as compared to US$ million during Drugs, pharmaceuticals & fine chemicals, transport equipments, electronic goods, manufactures of metals and plastic and linoleum products were the major items of export. Pulses, metalifers ores and metal scrap, wood and wood products, tea, raw hides and skins were the major items of import. Uganda was the top most trading partner within this region with a trade of US $ 312 million during Preferential Trade Agreement (PTA) with Southern African Customs Union (SACU) The Southern African Customs Union (SACU), the oldest Custom Union of the world, comprises of South Africa, Lesotho, Swaziland, Botswana and Namibia. India and SACU have expressed their intent to enter into a Preferential Trade Agreement (PTA) with the aim of promoting expansion of trade between the two parties and providing mechanism to negotiate and conclude a comprehensive Free Trade Agreement within a reasonable time. India and SACU have commenced negotiations for PTA and five meetings of the negotiating teams have taken place so far. Fifth round of negotiations on India-SACU PTA was held in New Delhi on 7-8, October, CECPA with Mauritius A Comprehensive Economic Cooperation and Partnership Agreement (CECPA) aimed at boosting Table 7.27 India s trade with Sub-Saharan Africa Region (Value in US $ million) Year Exports Imports Total Trade (April-Sept. 2009) (April-Sept. 2010) (Provisional) (April-Sept. 2011) (Provisional) (Source: DGCI & S) 135

41 Annual Report bilateral trade, investment and general economic cooperation between India and Mauritius is under negotiation. India-Africa Trade Ministers Meeting Prior to the 2 nd Africa-India Forum Summit held in Addis Ababa, Ethiopia on May, 2011, the 1 st India-Africa Trade Ministers Meeting was held at Addis Ababa, Ethiopia on 21 st May, The meeting was co-chaired by Hon ble Minister of Commerce and Industry (CIM), Govenment of India, Shri Anand Sharma, and H.E. Francisca Tatchoupe Belobe, Minister of Economy, Commerce and Business Development, of the Republic of Equatorial Guinea. From the African side, the Trade and Industry Ministers of Equatorial Guinea, Ethiopia, Namibia, Senegal, South Africa and Swaziland and representatives of many other African countries and the Regional Economic Communities (RECs) attended the meeting. Pursuant to the India-Africa Trade Minister Meet, a Joint Statement of India-Africa Trade Ministers was issued. The Indian and African Ministers expressed confidence that the bilateral trade between Africa and India will reach US $ 70 billion by The Ministers agreed on having an India-Africa Trade Ministers Dialogue as an annual event, and on the need to strengthen the trade relationship between the two sides through, inter alia, the building of trade related capacity and the conclusion of trade cooperation agreements between India and African Regional Economic Communities (RECs)/countries. They further agreed that effective implementation of the trade-related initiatives taken by the Indian Government in Africa, such as the Duty Free Tariff Preference Scheme, Cluster Development Studies, and various Capacity Building and Technical Assistance Programmes will contribute to the strengthening of the trade relationship between Africa and India. The Ministers agreed that they were committed to the core principles of Special and Differential (S&D) Treatment and obtaining more preferential treatment for all LDCs in the WTO Doha negotiations, acknowledged the common platform shared by India with the African Group on the issue of subsidies to cotton farmers in developed countries, which is of particular importance to four African countries, namely, Burkina Faso, Benin, Chad and Mali (the Cotton Four or C-4 group) and emphasized the development mandate of Doha Round of negotiations and called for the speedy conclusion of the Round and the establishment of a strong multilateral system based on mutually beneficial and balanced outcomes in agriculture, NAMA, services and rules. The Ministers also appreciated the establishment of an India-Africa Business Council and took note of the progress made towards the setting up of the Africa-India Institute of Foreign Trade in Kampala, Uganda. Following the India-Africa Trade Ministers Meeting, on 21st May, 2011, a Business Conclave, involving interaction of the Indian and African Trade Ministers with the Indian and African CEOs, was also held. During the meeting, the Ministers launched an India-Africa Investment E-Portal to facilitate bilateral investments between the two regions and also to provide guidance and support to the investor community. The Addis Ababa Declaration, which was issued at the 2 nd Africa-India Forum Summit held at Addis Ababa, Ethiopia from May, 2011 [attended by the Heads of State representing the continent of Africa, the representatives of the African Union (AU) and its institutions and the Prime Minister of Republic of India] took note with satisfaction the meeting of the Trade Ministers from African countries and India in Addis Ababa and took note of the Joint Statement issued by the Trade Ministers and lent its support to the ideas enunciated therein as indicators of our future cooperation. 136

42 CHAPTER-7 Focus Africa Programme The Focus Africa Programme was initially launched with focus on seven countries of Sub- Saharan African (SSA) Region, viz., South Africa, Nigeria, Mauritius, Tanzania, Kenya, Ghana and Ethiopia. With a view to further widen and deepen India s trade with Africa, the scope of this Programme was further extended to include Angola, Botswana, Ivory-Coast, Madagascar, Mozambique, Senegal, Seychelles, Uganda, Zambia, Namibia and Zimbabwe, along-with the six countries of North Africa, viz., Egypt, Libya, Tunisia, Sudan, Morocco and Algeria. Under this Programme, the Government extends assistance to exporters and Export Promotion Councils etc. to visit countries in Africa and organize trade fairs and also sponsors African trade delegations to visit India. A number of export promotion activities were conducted by various Export Promotion Councils and Apex Chambers with grant under MDA and MAI Scheme. A mega event, the India Show, was held in Addis Ababa, Ethiopia from 20th to 22nd May, 2011, prior to 2nd Africa-India Forum Summit. The theme of the India Show was Africa & India: Partners in Progress Friends Forever. The Show featured a Trade Exhibition titled Promoting Affordable & Sustainable Technologies from May, a Business Conference and a Cultural Programme. The Show was inaugurated by Hon ble Minister of Commerce and Industry, Shri Anand Sharma on 20th May, He also released a special publication entitled India-Africa Business Guide during the Inaugural session of the India Show. More than 80 Indian companies displayed their products on the occasion, ranging across sectors such as power, manufacturing, infrastructure, finance, IT, automotives, agriculture, irrigation, healthcare, mining and others. CIM also inaugurated on 20th May, 2011, the Handcrafting Hope and Multimedia Exhibition in the presence of the first lady of Ethiopia, Ms. Azeb Mesfin. Bilateral Cooperation Issues pertaining to trade and economic cooperation between India and African countries are reviewed through Joint Commissions and Joint Trade Committees (JTCs). Business to Business interactions have also been encouraged between Apex Indian Chambers and their African counterpart Chambers with a view to further enhance trade & investment relations between India and African Countries. High level bilateral meetings and visits by trade and industry delegations are also organized with a view to strengthening trade and economic partnerships between India and African countries. High level delegations were led by the Hon ble Commerce & Industry Minister for bilateral meetings with their counterparts in South Africa in October, 2011; and to Ethiopa in May, 2011, during which he also met the Ethiopian Prime Minister. Hon ble Minister of State of Commerce and Industry also led an official-cum-business delegation to Botswana, Zimbabwe and South Africa from 18th September to 21st September, During the visit, MoS(C&I) held bilateral meetings with various dignitaries in these countries and also addressed the business seminars/conferences organised in all the three countries. VIII. Trade with countries in the West Asia & North Africa (WANA) Region The West Asia and North Africa (WANA) region comprises 19 countries. These are:- (i) (ii) Six Gulf Cooperation Council (GCC) countries ( Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates), Six West Asian countries (Iraq, Israel, Jordan, Lebanon, Yemen and Syria) and (iii) Seven North African countries (Algeria, Egypt, Libya, Morocco, North Sudan, 137

43 Annual Report The Minister of State for Commerce and Industry, Shri Jyotiraditya Scindia and the Deputy Minister for Trade & Industry, South Africa, Ms. Elizabeth Thabethe, in a bilateral meeting, at Pretoria, South Africa The Minister of State for Commerce and Industry, Shri Jyotiraditya Scindia at a bilateral meeting with the Minister of Commerce and Industry of Zimbabwe, Mr. W. Nucbe, at Harare on September 20,