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Awareness Seminar on Thailand-India FTA 10 September 2004 – Bangkok Organized by Department of Trade Negotiations Ministry of Commerce, Thailand. Thailand-India FTA : Indian Private Sector Perspectives. Presented by Manab Majumdar Joint Director and

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Awareness seminar on thailand india fta 10 september 2004 bangkok organized by

Awareness Seminar on

Thailand-India FTA

10 September 2004 – Bangkok

Organized by

Department of Trade Negotiations

Ministry of Commerce, Thailand


Awareness seminar on thailand india fta 10 september 2004 bangkok organized by

Thailand-India FTA :

Indian Private Sector Perspectives

Presented by

Manab Majumdar

Joint Director and

Team Leader – WTO and FTA Division


Overview

Overview

  • Broadly, Indian business welcomes and supports Thailand-India FTA

  • FICCI considers the Agreement a significant milestone in India’s “Look East” Policy

  • In a FICCI-survey, 80% of respondents voted for more such Agreements

  • Of course, pockets of apprehension exist

  • Mainly due to lack of information and understanding

  • Hence, ‘awareness seminars’ like this are so valuable


Benefits a snapshot

Benefits – A Snapshot

  • FTAs create more trade - business to have greater market access

  • FTAs have positive impact on FDI-inflow

  • Scope for cost reduction through sourcing of inputs at competitive prices

  • FTAs with neighbouring countries more likely to succeed because of lower transport and communication costs


Dimension of opportunities

Dimension of Opportunities

  • Enormous potential reflected in

    • low bilateral trade turnover

    • marginal share in each other’s total trade


Scope for trade expansion a preliminary limited exercise 1

Scope for Trade Expansion – A Preliminary, Limited Exercise (1)

  • Focus on Thailand’s export opportunities (of EHS-products)

  • For each of the 82 EHS-items, we looked into Thailand’s global exports in 2003

  • Taking a cut-off $ 15 million, 42 products were short-listed

  • For these 42 items, India’s shares in Thai total exports were then examined – this suggests significant unexploited opportunities BECAUSE ……..


Scope for trade expansion a preliminary limited exercise 2

Scope for Trade Expansion – A Preliminary, Limited Exercise (2)

  • For 25 such products, India accounts for less than 1% of Thai global exports

  • For another 12, India’s share is between 1 and 3 per cent


Scope for trade expansion a preliminary limited exercise 3

Scope for Trade Expansion – A Preliminary, Limited Exercise (3)

  • So, there are 37 EHS-products for which

    • Thailand’s global exports are significant

      and

    • India’s share in Thailand’s total < 3%

  • Matching these items with India’s global imports, we find that for each of 25 such products India’s total imports exceed $ 10 million


  • Potential being translated into business reality

    Potential Being Translated into Business Reality

    • It’s already happening – leading Indian auto companies are asking for price quotations from Thailand

    • Sona Koyo Steering to source auto parts from Thailand

    • Increasing number of Indian manufacturers to set up manufacturing facility and buying offices in Thailand

      • Rico Auto has set aside $ 3 – 4 million

      • Ashok Leyland looking at manufacturing base

      • Jay Bharat Maruti in a technical joint venture

      • Sona Steering to establish a Representative Office

  • Another 5-7 companies are finalising similar strategies


  • Benefits would flow both ways

    Benefits Would Flow Both Ways

    • India’s obvious attraction is its huge market

    • Scope for production sharing

    • Advantages for India include inter alia

      • Tapping the Thai market – e.g. Toyota Kirloskar

      • Stepping up competitiveness by sourcing cost-efficient components from Thailand – e.g. Sheet Metal Components required in automotive sector

      • Likely positive impact in ACs and Refrigerators

      • Right platform and push for Indian companies to position themselves as global players


    Look at services too

    Look At Services Too

    • Quickly explore prospects for expanding bilateral trade in services

    • May start with select sectors

      • IT-enabled

      • Health-related

      • Audio-visual

      • Education

      • Tourism & travel-related

  • Sector coverage has to be substantial eventually


  • Challenges to meet

    Challenges to Meet

    • Some companies will lose out

    • Risk of third-country products unduly getting duty advantage – ‘trade deflection’

    • Emergence of ‘inverted duty structure’ – (in India’s case)

    • Pending internal reforms


    The way forward 1

    The Way Forward (1)

    • Strictly enforce and monitor ‘Rules of Origin’

    • Aggressively pursue necessary internal reforms

    • Help the ‘loser’ firms readjust and restructure their business

    • Widen the consultation process to all stakeholders

    • Strengthen the communication process between private sectors of both the countries


    The way forward 2

    The Way Forward (2)

    FTAs with right partners

    Accelerated process of internal reforms

    ‘Enabling environment’ for trade and industry

    Enhanced competitiveness of domestic enterprises

    Faster regional and global integration of the economy


    Awareness seminar on thailand india fta 10 september 2004 bangkok organized by

    THANK YOU


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