Context
- The Parliamentary Standing Committee on Commerce report on trade deficit with ASEAN.
Issues raised by the Committee
- India has suffered a trade deficit in respect of five ASEAN members — Malaysia, Indonesia, Thailand, Brunei and Lao PDR — over 2015-16 and 2016-17.
- Under the existing trade agreement, Indonesia has committed a tariff elimination on only 50% of its items, the least in comparison to other ASEAN member States.
- Exports of agricultural products from India faced high import tariffs and barriers, leading to a sharp drop in trade.
- On the other hand, India puts almost no quality norms for import of cheap processed food products from ASEAN countries.
- Concerns have also been raised by the committee about the imposition of safeguards and non-tariff barriers by ASEAN nations on exports of India’s textiles and pharmaceuticals.
Committee Recommendations
- Through the trade instruments/agreements, India must seek better market access for goods where India has an edge over ASEAN nations, like leather goods and pharmaceuticals, to improve the trade balance.
- The Committee recommended a look into cheap import of poor quality processed food products. It asked that appropriate quality norms may be fixed for import of such products from ASEAN as well as other regions of the world.
- It demanded that the government must ensure reciprocity in the reduction of tariffs in products like steel.
- It has also sought efforts to improve India’s access to services trade in ASEAN, with a focus on increasing the footprint of Indian banks and financial institutions in the region.
About India- ASEAN Trade
- India-ASEAN trade and investment relations have been growing steadily, with ASEAN being India’s fourth largest trading partner.
- The annual trade between India and ASEAN stood at approximately US$ 76.53 billion in 2014-15. It declined to US$ 65.04 billionin 2015-16 essentially due to declining commodity prices amidst a generalslowing down of the global economy.
- The ASEAN-India Free Trade Area has been completed with the entering into force of the ASEAN-India Agreements on Tradein Service and Investments on 1 July 2015.
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