21/03/2008 (The Economic Times), Kolkata - As trade negotiations between India and Malaysia on a Comprehensive Economic Co-operation Agreement (CECA) progress, Indian Institute of Foreign Trade (IIFT) has identified several products which have high export potential to Malaysia. The list includes auto components and parts, iron and steel and related products, textiles, electrical and mechanical machinery and their spares.
At the same time, the institute has identified several other products which, if imported from Malaysia at concessional duties under the proposed CECA, may pose a threat to Indian industries. Products clubbed in this category include plastic goods, wood articles, paper, polyester fibre, certain electrical and mechanical machinery and parts thereof, toys, gems, sports goods, chemicals and tanning and dying materials.
The IIFT has also zoomed in on several commodities that may pose a threat to Indian producers once they are allowed to enter from Malaysia at lower duties under CECA. Commodities identified in this category include rubber, milk, sweet potato, vegetable oils & fats, cocoa & cocoa products and cereal preparations.
The lists of products have been drawn up by the institute after considering India's relative strength and weaknesses in those products vis-a-vis Malaysia. The SWOT analysis has been made after taking into account the revealed comparative advantages (RPA) of both the countries. CECA negotiations between India and Malaysia are expected to be completed by end-2009.
The study has been revealed by the institute at a consultation meeting with Indian industries on India’s bilateral cooperation with the Asean block, with a special focus on impact of the proposed CECA with Malaysia. The meeting has been organised on Thursday by CII (eastern region) in collaboration with IIFT.
Referring to the proposed free trade agreement (FTA) between India and the Asean block for which trade negotiations are under way, Ernst & Young director Ram K Agarwal observes that India should be more cautious while agreeing to provide further concessions to Asean nations in terms of tariff cuts for a host of agricultural commodities under the proposed FTA.
India, under the ongoing talks for FTA with Asean, has already offered to bring down import duties on various agri-commodities, for example, on coffee from 100% to 50% and on pepper from 70% to 50%. Already in response to demands of Malaysia and Indonesia, India in July 2007 has brought down customs duties on crude palm oil from 50% to 45% and on refined palm oil from 57.5% to 52.5%.
Any further cut in duties on imports of crude palm oil and refined palm oils from Asean region is expected to adversely hit India’s coconut and pepper farmers and coffee growers. Further cut on customs duties on coffee, imported from the region, will not only affect coffee planters but also tea growers in the country, apprehended Mr Agarwal.