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India agrees to do away with tariffs on proposed RCEP with condition

India has agreed to cut off tariffs on an equal number of products for all member countries of the proposed Regional Comprehensive Economic Partnership (RCEP) on the condition that it be allowed to stagger implementation of the cuts over a longer period of time depending on the country involved and the item/items. New Delhi has also insisted that services be part of a single undertaking, together with goods and investments and not a separate agreement. RCEP countries, including the 10-member ASEAN, South Korea, Japan, China, India, Australia and New Zealand, are trying to create one of the largest free-trade bloc in the world and want to conclude the negotiations by next year.

Commerce and industry minister Nirmala Sitharaman has said that the three-tiered approach was given up in favour of a single-tier tariff cut at the RCEP as it was reasoned that in a bloc, it could lead to complications. On its part, India insisted that agreement on services should be part of the single undertaking and that tariff cuts should be staggered and time period for each country would be different.

This is a step back from India’s original position of giving China, the country Indian industry is most apprehensive about in the 16-member bloc, the lowest opening (on about 42 per cent items) in the three-tier structure and also its subsequent proposal of not bringing down tariffs to zero. However, if India is allowed a long-term staggering of the tariff cuts for China, it may lower damage to the Indian industry. While RCEP members were working on eliminating tariffs in 10 years, the staggering would logically be done over a longer period, although the details are yet to be culled out.

 
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