Finance Ministry Asks Commerce Ministry To Assess Revenue Impact Of Proposed Free-Trade Agreement
The finance ministry has asked its commerce counterpart to assess the revenue implication of the proposed mega free-trade agreement—the Regional Comprehensive Economic Partnership, sources said.
In a letter to the commerce department, the revenue department also suggested it to form a joint team of officials to understand the revenue (customs duty foregone) implication of RCEP.
“The revenue secretary has written a letter to the commerce secretary to calculate the revenue impact of the proposed agreement,” they said.
The RCEP is an agreement being negotiated by 16 countries since 2013. So far, 27 rounds of talks at the chief negotiators level have been conducted.
Several challenges in both goods and services sectors still persist and need to be resolved before reaching the conclusion of negotiations RCEP.
The 16-member RCEP bloc has targeted to conclude the negotiations by November this year.
The major challenges in front of India include widening trade deficit with member countries, such as China, and disproportionate loss in customs revenue due to elimination or significant reduction in import duties.
India registered trade deficit in 2018-19 with as many as 11 RCEP member countries, including China, South Korea and Australia, out of the grouping of 16 nations.
Further, in a comprehensive stakeholder consultation on the pact, several sectors including dairy, metals, marine products, electronics, chemicals, pharmaceutical, plastics and textiles have registered reservation on the proposed agreement.
RCEP bloc includes the 10 Association of Southeast Asian Nations members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and Australia, China, India, Japan, South Korea and New Zealand.
The agreement aims to cover issues related to goods, services, investments, economic and technical cooperation, competition and intellectual property rights.
In the merchandise sector, all the countries want India to eliminate customs duties on maximum number of goods as the country’s huge domestic market provides immense opportunity for exports. But, the domestic industry has raised serious concerns over presence of China in the grouping.
India trades in over 11,500 products. Certain sensitive sectors such as agriculture are mostly kept out of the purview of such agreements to protect the interest of farmers.
India is looking for a balanced trade agreement, as it would cover 40 percent of the global gross domestic product and over 42 percent of the world's population.