Source: Economic Times
Five years after the India-South Korea Comprehensive Economic Partnership Agreement (CEPA) was implemented, the two sides have begun talks to expand the deal to cover more manufacturing sectors despite New Delhi gaining little on the services front.
Sources said India has pitched for easing restrictions on export of diamonds, textiles goods and fruits and vegetables. In return, Korea is seeking lower import duty for nearly 800 items, including auto components, some steel products and electronic goods.
Under CEPA, Korea was to reduce or eliminate duties on 93% of all tariff lines or products, while India had to offer similar concessions for 85% of all tariff lines. Including the sensitive products, India has to lower duties over a nine-year period, compared to seven years for South Korea.
In the meanwhile, India realized that several of its products such as diamonds were not gaining much attraction in the Korean market as Seoul decided to treat the better quality precious stone as luxury goods and imposed higher tariffs. As a result, the government is now pitching for changing rules to ensure entry for diamonds that are cut and polished in India, especially those with higher caratage.
Similarly, sources said, the rules on some of the fruits and vegetables are such that Indian produce is not able to enter Korea.
In case of textiles, it’s a story of a missed opportunity as the negotiators didn’t push it hard. An analysis by the Apparel Export Promotion Council had shown that only four knitted items were given zero-duty access and their imports then were estimated at $10,000 a year.
So, the government is obviously keen to correct this anomaly.
But the India-Korea CEPA is also a story of a missed opportunity on services as trade in several of the sectors, where concessions were negotiated, has been a non-starter given that the mutual recognition agreements are yet to be negotiated. As a result, the gains remain only on paper.
Data on the commerce department website shows that trade with Korea has increased from $467 million in 2009-10 to around $765 million in 2013-14.