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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. 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

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  1. Awareness Seminar on Thailand-India FTA 10 September 2004 – Bangkok Organized by Department of Trade Negotiations Ministry of Commerce, Thailand

  2. Thailand-India FTA : Indian Private Sector Perspectives Presented by Manab Majumdar Joint Director and Team Leader – WTO and FTA Division

  3. 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

  4. 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

  5. Dimension of Opportunities • Enormous potential reflected in • low bilateral trade turnover • marginal share in each other’s total trade

  6. 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 ……..

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. THANK YOU

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