India may remove specific duties on some textile items from Pakistan, Bangladesh

The Indian government might remove specific duties on a large number of textile items from Pakistan and Bangladesh, Press Trust of India (PTI) reported Thursday.

The government's contemplated move seemed to be aimed at giving its two immediate neighbors greater access to its market, it said.

A proposal recommending removal of specific duties on about 60- 70 percent of 271 textile tariff lines and their replacement by simple duty is likely to go for the approval to the Prime Minister 's Trade and Economic Relations Committee (TERC) next week, official sources told PTI Thursday.

Indian Prime Minister Manmohan Singh in May this year set up a high-powered strategic committee to bolster economic and trade ties with various countries and take a close look at Free Trade and Economic Cooperation agreements.

The committee headed by the Prime Minister himself, considered to be first ever institutional mechanism of its kind, is also dealing with the other forms of bilateral, regional and multilateral economic and trade ties.

Earlier, TERC at its meeting on August 10 had asked textiles and commerce ministries to prepare a roadmap for replacing specific duties with simple duties.

Once this duty rationalization proposal gets the government's nod, import duties on these items would be lesser as specific duty, which is assessed on the basis of some unit of measurement such as quantity (per piece) or weight, usually turns out to be higher.

New Delhi has been under pressure from Islamabad and Dhaka for sometime to remove such disparity in the duty structure.

The specific duty on certain textiles item ranges from less than half-a-dollar to nearly three dollar per piece, whereas a simple duty would entail a flat rate of up to 15 percent.

The committee might also discuss the issue of removal of specific duties on jute, fruits and dry fruits from these countries.

Under the ongoing WTO negotiations on industrial tariffs, all the specific duties would have to be converted to their ad-valorem equivalents.

The Indian government, however, wants these specific duties replaced in the context of SAARC with the South Asian Free Trade Agreement (SAFTA) coming into operation from Jan. 1, 2006.

Direct bilateral trade between Pakistan and India through official channels is said to be just 500 million US dollar while trade routed through other countries stands at more than 2 billion US dollar.

Similarly, the bilateral trade between India and Bangladesh stood at 1.6 billion US dollar in 2004.

However, domestic textile industry, is bitterly opposed to any change in the specific duties on textiles items as it feels the move would lead to a huge spurt in imports from neighboring countries.

Source: Xinhua