India wants tariff concessions for its exports to China. Among the exports are naphtha, bovine leather, shrimps and cotton yarn. Other products eligible for concessions include frozen, shelled shrimps, broken rice, fresh grapes, zinc, aluminium oxide and hydrocarbons like paraxylene, polyethylene, polypropylene and benzene.

The reason is that China has granted deep duty cuts to India’s competitors including Peru, Pakistan, Australia, South Korea and Asean countries in free trade agreements with them, which has displaced some of India’s exports. The Asia Pacific Trade Agreement is the only operational trade pact linking India and China. South Korea, Bangladesh, Lao PDR and Sri Lanka are also APTA members.

For instance, India’s exports of naphtha, a major industrial fuel, to China are subject to a six per cent duty with a ten per cent margin of preference under APTA. This is the highest duty for any of China’s FTA partners as Asean countries pay zero, Australia 2.4 per cent and South Korea 4.8 per cent. India’s exports of frozen shrimp and prawns form a small share in the Chinese market due to the absence of tariff concessions. Asean members face zero per cent tariff in the Chinese market and thereby account for a six per cent share in that country’s imports of these products.