Think tank points to gaps in trade deals with Singapore, Asean

India should study the bilateral free trade agreements with Singapore and Thailand together with its review of the multilateral trade pact with the Association of Southeast Asian Nations (Asean), a think-tank has recommended. 

The Global Trade Research Initiative (GTRI) said firms probably use the trade agreement with Singapore to transship coal, iron, steel, or fertilizers as the country does not produce any of these commodities. 

The GTRI report noted that electronics constituted a significant portion of imports from Singapore, totaling $7.2 billion in the last fiscal, including computers ($1.7 billion) and integrated circuits ($1.5 billion), besides plastics, iron and steel, gold, and some amount of fertilizers.

“Singapore does not produce coal, iron, steel, or fertilizers. Firms may be transhipping these from Singapore. But this adds to cost and is bad business. Such imports must be out of the FTA, but need investigation why they are happening in the first place. Rules of Origins may be checked for use of value addition norms for electronics products, gold etc,” Srivastava said.

India has had a comprehensive economic cooperation agreement with Singapore since 2005 and free trade agreement with Thailand since 2006. Later, India signed a free trade agreement in goods with Asean in 2010. 

“India has a separate FTA with Singapore with more relaxed rules of origin of products. The two FTAs may be studied together. India has a separate FTA with Thailand called early harvest scheme (EHS) with relaxed rules of origin than what India-Asean FTA offers. Substantial imports may be happening through EHS. The two FTAs may be studied together,” GTRI said in its report.

The 10-member Southeast Asian bloc comprises Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. India and Asean have agreed to review their trade pact and are aiming to conclude the exercise by 2025.

India’s exports to Asean, which was at $19.1 billion in 2008-09, increased to $44 billion in 2022-23, while its imports rose to $87.6 billion in the last fiscal as against $26.2 billion in 2008-09.

Indonesia, Singapore, Malaysia, Thailand, Vietnam account for 92.7% of India’s exports and 97.4% imports from Asean, the GTRI report noted.