Thailand pushes for long-overdue FTA with India

Thailand pushes for long-overdue FTA with India
Thailand pushes for long-overdue FTA with India

Thailand is among India's top-most trading partners in South Asia and yet a free trade agreement (FTA) between the two has proved difficult for all these years. There is renewed hope this arrangement may finally be put to rest as Bangkok is keen to thrash out the broader brushstrokes, leaving the nitty-gritties for later.

India and Thailand share more than just a maritime border in the Andaman Sea, with religious and cultural ties providing a strong base for what is described as a comprehensive partnership between the two countries. Both countries are important regional partners linking South and Southeast Asia. They cooperate closely in the ASEAN, East Asia Summit (EAS) and BIMSTEC groupings, with India's Act East policy complementing Thailand's “Look West” policy.

Two-trade trade between the countries has averaged annually at $8.46 billion in the past five years and the Indian market remains attractive for Thai investors, with opportunities in infrastructure, tourism and retail industries. Thai goods benefit from reduced taxes under the ASEAN-India FTA in Goods, which came into effect back in 2010 and resulted in more goods flowing into India.

However, the long-overdue India-Thailand FTA has remained elusive. Thai Prime Minister Prayuth Chan-o-Cha now reportedly hopes to break this logjam with an expected visit to India in the coming weeks to discuss increasing bilateral trade as well as resolving issues that have been holding the FTA back.

"With disagreement on some topics, Thailand thinks both countries should finalise the agreement in some parts and continue negotiating on the remaining topics," Thai commerce minister Apiradi Tantraporn said after a recent meeting with the Indian ambassador to Thailand, Bhagwant Singh Bishnoi. Major investments from India to Thailand are in sectors such as agricultural products, minerals & ceramics, metal products and machinery, electrical and electronic products, chemicals and textiles and Indian companies like Tata, Aditya Birla group, IndoRama, Lupin, Ranbaxy, Dabur, Bharti Airtel, NIIT, Punj-Lloyd, Kirloskar and public sector enterprises Indian Overseas Bank, Bank of Baroda, Air India and New India Assurance are fairly active in the country.

It is estimated there are around 200,000 people of Indian origin in Thailand, many of them having lived there for several generations over the past century, and Thailand sees India as a gateway to South Asia and beyond. Against this backdrop, Thailand and India had signed a framework agreement covering the liberalisation of trade in goods, services and investment in October 2003. It was agreed that they would begin talks and establish an FTA by 2010. Both the countries initially agreed to enact an early harvest scheme (EHS), which meant agreements on one or more topics must be concluded before the scheduled completion of a multi-issue round.

The agreement specified tariff reductions under the EHS for 82 items, including fruits, processed food products, gems and jewellery, iron and steel products, auto parts, electronic goods and electric appliances. Tariffs on these products were eliminated in Sept 2006. However, India suspended gold jewellery imports from the region in 2013 and also wants Bangkok to be more responsive to its demands in the FTA in the services sector. India is also believed to be keen on withdrawing sugar and rubber gaskets from planned tariff cuts. The sticking point from the Thai end is around textiles and petrochemical sectors. With moves towards finding a mutually agreeable solution gaining momentum once again, a conclusion to this long-drawn saga may well be in sight.

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