FM alert against rushing into FTAs

Says Govt Needs To Boost Local Manufacturing To Create More Jobs New Delhi: It was supposed to be a brainstorming session convened by Prime Minister Manmohan Singh to discuss Indias trade engagement with the rest of the world. ut it was overshadowed by the warning sounded by finance minister P !hidambaram against hasty signing of bilateral trade pacts" and his forceful argument that government needed to boost local manufacturing activity to create more #obs. Mondays meeting of the $rade and %conomic &elations !ommittee '$%&!(" the governments thin) tan) on trade issues" saw passionate e*changes" with Planning !ommission deputy chairman Monte) Singh +hluwalias support for greater trade openness coming under attac) from !hidambaram as well as , -rishnamurthy" chairman of the National Manufacturing !ompetitiveness !ouncil. Industry chambers and trade bodies have for long complained that the free trade agreements '.$+s(" which allow /ero or low duty import of goods" have hurt local players" without ensuring commensurate gains for local e*porters. $he revenue department in the finance ministry has also maintained for long that the commerce department needs to underta)e an impact assessment of .$+s" pointing out that claims of India gaining through services e*ports and higher investment in return for lower duty access for imports are not bac)ed up by data. $he worry found full e*pression with !hidambaram 0uestioning +hluwalias claim about .$+s being an advantage. Sources 0uoted !hidambaram as telling +hluwalia that this was not borne out by Indias e*perience over several years. 1hen contacted" !hidambaram declined to comment. $he finance ministers assertion was supported by -rishnamurthy who emphasi/ed that 234 of imports faced nominal customs duty" ranging from /ero to 54. Doubts about the benefits flowing from .$+s are not new" but they have been strengthened by instances such as that of +sean which )eeps putting off an agreement on services years after a goods deal was signed leading to steep tariff reduction on several commodities. In fact" the decision to delin) goods and services agreement was done at the behest of the PM6 and had faced criticism as India lost its bargaining chip. $he latest debate over .$+s comes after a long gap and coincides with the commerce department chasing a small window to sign a trade deal with the %uropean 7nion. In the past" agreements with +sean have come under scrutiny from top !ongress leaders" including Sonia 8andhi and defence minister + - +ntony" forcing the commerce department to twea) the deals to address the concerns raised by the bigwigs. !hidambaram" who has refrained from going public with his grievance" made good use of the $%&! platform to state his position" in what could escalate the debate on .$+s. Sources said not only did the finance minister complain about the 9perfunctory: presentation by the commerce department which pilots .$+s but also spo)e against the absence of a study to gauge the effect of the agreements. ;e then went on to argue how manufacturing was )ey to the Indian economy" said a source.

1hen +hluwalia" a )ey aide of the PM who has pushed .$+s" argued for the need to stay engaged as India will otherwise miss the bus" !hidambaram" sources said" retorted by saying that earlier" he too believed that the gains would accrue. $he strong pitch came as a surprise to many" considering that the finance minister has often been critici/ed for his stance on opening up. Sources said !hidambaram specifically cited the possible adverse impact of customs duty reduction for automobiles and components under the proposed bilateral trade and investment treaty with the %7 that has been under negotiations for over si* years. <ocal auto players" along with =apanese and -orean car>ma)ers" have been protesting against a steep tariff reduction. India has virtually agreed to allow car imports at near /ero duty under for a specified number of vehicles. AT LOGG !" A# S$ Planning !ommission n deputy chairman Monte) Singh +hluwalias support to greater trade openness came under attac) from finance minister P !hidambaram 'above( Industry chambers and trade bodies complain that .$+s have hurt local players by not ensuring commensurate gains g for local e*porters. $he revenue department in the finance ministry has also a maintained that the commerce department needs to underta)e an impact assessment of .$+s. Source:>
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