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Mercosur PTA spells good fortune for Indian goods

Indian manufacturers of split air-conditioner systems and refrigerators and the country’s leather and footwear industry are all set to get a leg-up in the Latin American market once the preferential trading arrangement between India and Mercosur comes through..

, TNN|
Jul 24, 2006, 02.34 AM IST
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NEW DELHI: Indian manufacturers of split air-conditioner systems and refrigerators and the country’s leather and footwear industry are all set to get a leg-up in the Latin American market once the preferential trading arrangement (PTA) between India and Mercosur comes through. The agreement is scheduled to be implemented later this year.

The 460-odd items from India which will be given preferential access to the markets of Argentina, Brazil, Paraguay and Uruguay through the PTA also includes silk, cotton, meat, chemicals and glass & glass products. India, on the other hand, will give preferential access to 424 products originating from the four Mercosur members including chemicals, machine tools, petrochemicals, steering boxes and electrical equipment.

So eager is India about exploring the untapped potential of the region, that it has decided to show unprecedented flexibility in the area of rules of origin (ROO) guiding the agreement and settle for a lenient criteria. It has said yes to the use of just a single criteria (value-addition) instead of the favoured twin-criteria (value addition plus change-in-tariff heading).

India’s refusal to budge on its demand for a twin-criteria for ROO has delayed a number of bilaterals India has negotiated so far. In fact, the early harvest programme planned with the Asean was dropped because of disagreement over the ROO issue.

Sources said that since India was entering into a PTA with Mercosur involving just a handful of products, a lenient ROO would not hamper the country’s interest.

“When we decide to graduate to a full-fledged FTA with Mercosur, we will certainly insist on a twin-criteria,” an official said. ROO is an extremely important part of a bilateral agreement as it determines which product should be considered as originating from the participating country and given preferential treatment and which should be excluded.

The India-Mercosur PTA is likely to be implemented after the NAM summit and the IBSA (India, Brazil, South Africa) summit later this year. In India, the Prime Minister’s Trade & Economic Relations Committee (TERC) is expected to give the final green signal soon.

India is eager to enter the Mercosur region as it has about 200 m people and does trade worth $ 200 bn annually. India’s share in the region’s total imports is less than 1% and there is a huge scope to enhance it.
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