Positive signals from Aus FTA utilization
Mint was unable to ascertain the names and nationality of the exporters that used the certificates of origin. These are early indicators but the general direction is positive— trade is expected to grow on the basis of the high utilization rate. “Wherever duty concession has been given, exporters have availed it.
Average utilization rate that we see is nearly 90%. As far as export growth is concerned, shipments of electrical transmissions have jumped. Engineering goods, readymade garments, marine products have surged.
They used to attract 4-5% duty prior to the FTA (free trade agreement)," the official said. “There are 113 lines where duty reduction is going to go down to zero percent in five years. Two reductions have already happened.
Except for 113 lines where the reduction will take place in five phases, rest is already zero," the official said. Under the FTA between India and Australia that came into effect on December 29 last year, duties were reduced to zero immediately on 98.3% of tariff Lines that amounted to 96.4% of value of Indian exports to Australia. Historically, Indian FTAs have had extremely low FTA utilization.
Compared to developed countries where utilization is as high as 75%, India’s has been 25%. Officials said the numbers are based on the certificates of origin which are mandatory to claim duty concessions under an FTA, and may translate into actual exports with a lag. Official data showed that India’s exports to Australia between January to May dipped by 32% compared to the same period last year and imports shrank by 25%.
Read more on livemint.com
