Thailand, India to cut duties

Thailand, India to cut duties

Rajesh Mahapatra, New Delhi, Associated Press

India and Thailand will start slashing duties on each other's products this week in preparation for a free trade deal between the two Asian countries, their trade ministers said.

The two aim to complete free trade negotiations by March, but have decided to start slashing duties on 82 products by 50 percent on Wednesday, they announced.

Import duties on these goods will be eliminated by Sept. 1, 2006. They include auto components, iron and steel products, mangoes, grapes and wheat and cover about 7 percent of the US$1.4 billion in annual trade between the two countries.

Thai trade minister Watana Muangsook described the agreement as a "momentous chapter in the relations between India and Thailand."

Indian Commerce Minister Kamal Nath said more products will be added as the two countries make progress on the free trade pact.

"If the FTA process is properly implemented, Indian exporters can gain market access of about $5 billion in Thailand in just five years," said Ram Upendra Das, a New Delhi-based trade analyst who also is a member of a joint study group set up by the two countries.

"The Thais will also gain as much, if not more," Das said.

India is trying to build stronger economic ties with fast- growing East Asian economies after decades of ignoring them. New Delhi also is negotiating free trade pacts with Singapore and the 10-member Association of Southeast Asian Nations. It is hoping for similar deals with China and other Asian countries.

However, the agreement has fueled concern among some industry groups in India that Thailand will dump cheap goods, especially electronics and auto components, where it has a cost advantage over India.

But the trade ministers dismissed those fears.

"We will consult the industry at every step of the way. Any free trade agreement that we have must be in the larger interest of the industry," Nath said.