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10 Jun 2010

Trading

India: Promising Market; FTA Privileges Should Be Used More (Business Brief No.2841)

คะแนนเฉลี่ย
India is a large market with promising opportunities. Their steady economic growth this year should help bolster Thai exports to India over the remainder of this year. Most importantly, Thai businesses attempting to penetrate that market can utilize the Thai-India Free Trade Agreement (TIFTA) and ASEAN-India Free Trade Agreement (AIFTA) privileges that have already come into effect. Tariff reductions per the TIFTA have enabled Thailand to gain a trade surplus with India since 2005. This is contrary to times before that when Thailand always sustained deficits with India. Meanwhile, tariff reductions per the AIFTA, which covers a greater number of product categories – many being ineligible for TIFTA tariff concessions – plus flexibility in the new Cumulative Rules of Origin aid in greater Thai access to the Indian market, including trade in processed fruit products, canned fish, seasonings, plastics, jewelry, electronics, aluminium, furniture, auto-parts, etc.
As for products that India has put on their ‘Highly Sensitive' List, these may not affect our exports much, because they are largely farm products that Thailand does not reciprocate on with our own tariff reductions, or products with which we have low competitiveness. Among them are silk, palm oil, tea, coffee and pepper corns. However, several of our more competitive products in India's ;Highly Sensitive List”, such as natural latex, smoked rubber sheets, some auto-tires and electric motors will be affected, though India will compensate such losses with increased access for Thai products in the Sensitive List, rising to 91 items, a more preferential state than the 50 items granted to other ASEAN member nations.
AIFTA tariff reductions may put Thai products in direct competition with those from other ASEAN nations, especially Singapore, which is a primary import source for India within ASEAN; they have entered into bilateral and multilateral FTAs with India as has Thailand.

Meanwhile, Indonesia and Malaysia may not be our competitors in the Indian market at the moment because our crude and refined palm oils are not as competitive as theirs. These products are in India's Highly Sensitive List. If Malaysia and Indonesia enter into bilateral FTAs with India, they may become very strong competitors in other product categories there. While Indian bilateral trade with Cambodia, Laos and Vietnam is relatively small in value, the value of their exports to India has grown at an impressive pace. If India decides to cut tariffs further on imports from them, our exports will likely be undermined due to stiffer competition.

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