SAFTA Country Presentation by India Topics covered under - PowerPoint PPT Presentation

SAFTA Country Presentation by India

Topics covered under presentation • India’s efforts on reduction of the Sensitive lists under SAFTA, especially for LDCs • Implementation challenges with respect to duty-free market access access granted by India to South Asian LDCs under SAFTA

BACKGROUND • The Agreement on South Asian Free Trade Area (SAFTA) was signed in 2004 and came into force from 1 st January 2006. • Phased Tariff Liberalization Programme (TLP) of SAFTA became operational from 1 July 2006. • TLP would cover all tariff lines except those kept in the sensitive list by the member states. • India, Pakistan and Sri Lanka are categorized as Non-Least Developed Contracting States (NLDCs). • Bangladesh, Bhutan, Maldives and Nepal as Least Developed Contracting States (LDCs). • Afghanistan became the eighth member of SAARC and tariff concessions to Afghanistan have been extended under SAFTA with effect from 7 August 2011.

TARIFF LIBERALISATION PROGRAMME PHASED REDUCTION OF NLDCs LDCs SRI LANKA TARIFFS 20% BY 31.12.2007 30% BY 31.12.2007 0-5 % BY 31.12.2012 BY 31.12.2015 BY 31.12.2013 0-5% FOR LDCs BY 31.12.2008 SENSITIVE LISTS OF MEMBER STATES Member Revised Sensitive List Percentage of tariff lines Percentage of tariff lines State at 6 Digit Level under Sensitive List Outside Sensitive List (No. of Tariff Lines) Afghanistan 858 17% 83% Bangladesh 987 (LDCs) and 19.74% (LDCs) and 80.26% (LDCs) and 993 (NLDCs) 19.86% (NLDCs) 80.14% (NLDCs) Bhutan 156 3.12% 96.88% India 25 (LDCs) and 0.50% (LDCs) and 99.50% (LDCs) and 614 (NLDCs) 12.28% (NLDCs) 87.72% (NLDCs) Maldives 154 3.04% 96.96% Nepal 998 (LDCs) and 19.96% (LDCs) and 80.04% (LDCs) and 1036 (NLDCs) 20.72% (NLDCs) 79.28% (NLDCs) Pakistan 936 18.72% 81.28% Sri Lanka 837 (LDC) 16.74%* (LDCs) and 83.26%* (LDCs) and 963 (NLDC) 19.26% * (NLDCs) 80.74% * (NLDCs)

India under SAFTA • Indian policy under SAFTA was enunciated at Fourteenth SAARC Summit held in New Delhi in April 2007, that it is ready to accept asymmetrical responsibilities, opening her markets to her South Asian neighbours without insisting on reciprocity. • A sensitive list of 25 lines pertaining to liquor and tobacco (HS 6 – digit level ) for LDCs. • A sensitive list of 614 lines (HS 6/8 - Digit level) for Pakistan and Sri Lanka. • The import of all goods from SAFTA LDCs, except those falling in the SL, is at zero basic customs duty. • The import of all goods from SAFTA NLDCs, except those falling in the SL, is currently at peak tariff levels of 5% (w.e.f. 1st January, 2013). Items in the SL can be imported at MFN tariffs.

Current State of play under SAFTA India has allowed zero duty access for SAARC LDCs for almost 100% of total Tariff lines. Bhutan and Maldives have given preferential access for 97% of Tariff lines. India has brought down peak tariff to 5% for 88% of Tariff lines for NLDCs(Pakistan & Sri Lanka). Pakistan has given preferential access for 81% of tariff lines. Benefit to India partially blocked through its Negative List of 1209 tariff lines. Other members are bringing down peak Tariff to 5% for about 82% of total Tariff lines. (LDC’s to complete 1 st phase Tariff reduction by December 2015)

PRESENT STATUS An adhoc Working Group for Phase III reductions in Sensitive List has been formed. It was agreed that Sensitive lists will be brought down by 20%(except Sri Lanka). After TLP-III, the sensitive lists are likely to be: Member State Percentage Reduction No of Tariff lines in agreed Sensitive list after(TLP-III) (1) (2) Afghanistan 20 % 680 Bangladesh 20 % 795 Bhutan Not Applicable India 20 % for NLDCs only 491 Maldives Not Applicable Nepal 20 % 829 Pakistan 20 % 749 Sri Lanka 10 % 867

• Bhutan, India, Maldives, and Pakistan put forward a proposal for consideration that peak tariff on all products may be reduced to 0-5 % by the year 2020, excluding a small number of about 100 tariff lines which may still remain in the Sensitive List. • Working group agreed that the other Member States who do not agree with this vision should give their alternative vision with longer time frame and increased number of products which could remain in their Sensitive Lists during the Third Meeting of the Working Group. • In SAFTA meetings held on 2-6,July,2015,there was broad consensus that sensitive lists be brought down to 300-400 lines by the year 2030.However, Sri Lanka wants to proceed in line with the provisions of SAFTA as contained in Article 7 (3) (b) in reducing the sensitive lists. The delegation of Sri Lanka also noted the consensus emerging among the Member States with regard to reduction of number of products in their Sensitive Lists by 2030 and agreed to bring this to the notice of its stakeholders while holding consultations with them. • The Indian delegation emphasized importance of trade liberalization in the milk sector so as to form a Milk Grid within the SAARC region wherein greater intra- regional trade takes place in milk and milk products rather than resorting to imports of such products from outside the SAARC region. • After discussion, it was agreed that this matter may be further examined through a Concept Note by India, circulated through the SAARC Secretariat to all Member Countries.

Agreed Road Map for Trade Normalisation with Pakistan • Pakistan will: i. Remove its Negative List of 1209 items for imports from India. ii. Allow import of all tradeable goods from Wagah Land Route. iii. Reduce its SAFTA Sensitive List from 936 items at 6 digit HS to 100 items at 6 digit HS over a period of five years in equal proportion. iv. The tariff rates for items removed from the Sensitive List would be progressively reduced to Basic Customs Duty of not more than 5% within a period of 18 months. v. Each of the tariff rate cuts would be carried out on pro-rata basis at six monthly intervals. • India will: i. Reduce its SAFTA Sensitive List (for Non-LDCs) from 614 items at 6-digit HS to 100 items at 6-digit HS. ii. The tariff rates for all items removed from the Sensitive List would be Progressively reduced to Basic Customs Duty of not more than 5% within a period of one year. iii. Each of the tariff rate cuts would be carried out on pro-rata basis at six monthly intervals. • Finance Ministry approved the Indian offer and to reduce tariff to 5%. • During the meeting between Prime Ministers of India and Pakistan on 27 th May 2014, it was stated that the two countries could move immediately towards full trade normalisation on the basis of the September 2012 roadmap.

SAARC Agreement on Trade in Services (SATIS ) • Agreement on Trade in Services was signed on 29 April 2010. The instrument has been ratified by all countries. • The schedules of specific commitments will be finalised at the eleventh meeting of the Expert Group scheduled to be held after all the member states exchange their respective offers through the SAARC Secretariat. • India, Bhutan and Bangladesh are ready for tabling their final offers. • During SAFTA meetings on 2-6,July,2015,the delegations from Pakistan and Sri Lanka informed that their respective Final Offer Lists would be ready by 31 October 2015 after due internal approvals. Maldives informed that their consultations with stakeholders are underway and they would be in a position to table their Final Offer List by end of 2015. • These Final Offer Lists would be examined by the Member States and subsequently tabled during the Twelfth Meeting of the Expert Group to be held in New Delhi in February 2016.

Regional Integration initiatives requir ed • Liberal issue of multi entry visas for business purposes. • Connectivity needs to be improved through SAARC Motor Vehicle/ Railway agreements. • No port restrictions on import of goods from SAARC countries. • Regional electricity grid for trade in Power (Transmission line of India with Pakistan/ Under sea cable connectivity with Sri Lanka). • Fast tracking of Hydro Power Projects in Nepal/Bhutan, India & Pakistan. ( Total estimated unutilized potential of 200,000 MW).

RECENT AGREEMENTS • A Motor Vehicle Agreement for the Regulation of Passenger, Personal and Cargo Vehicular Traffic amongst Bangladesh, Bhutan, India and Nepal (BBIN) has been signed at the BBIN Transport Ministers’ meeting on 15 th June, 2015 at Thimphu, Bhutan. • Agreement on Coastal Shipping between India and Bangladesh to promote two-way trade between India and Bangladesh through ports was signed during PMs visit to Dhaka on 6 th June, 2015. • Protocol on Inland Waterways Transit and Trade (PIWTT) outlining mutually beneficial arrangements for use of waterways of both countries for commerce between them and for passage of goods between two places in one country and to third countries through the territory of the other under mutually agreed terms was signed during PMs visit to Dhaka on 6 th June, 2015. Protocol has five years validity with automatic renewal. • Revised India – Bangladesh Trade Agreement facilitating connectivity to North East and trade with third countries Signed on 06 June, 2015.

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