India-Chile expanded PTA to come into effect on 16 May
The expanded PTA would immensely benefit both sides as a wide array of concessions has been offered by both sides on a number of tariff lines which will facilitate more two-way trade.
The expanded Preferential Trade Agreement (PTA) between India and Chile will come into effect on 16 May 2017.
According to Union Ministry of Commerce & Industry, the Preferential Trade Agreement (PTA) between India and Chile was first signed on 8 March 2006, which came into force from August 2007.
The notification also says that the original PTA had a limited number of tariff lines wherein the two nations extended Preferential Trade Agreement (PTA) on 8 March 2006 which came into force with effect from August 2007. India’s offer list to Chile consisted of only 178 tariff lines whereas Chile’s offer list to India contained 296 tariff lines at the 8-digit level.
Later, India and Chile signed an agreement on the expansion of the India-Chile PTA on 6 September 2016, which will be implemented from 16 May 2017. This expanded PTA was approved by the Union Cabinet in April 2016.
Under this trade agreement, both the countries have offered to lower or eliminate duties on a number of items traded with each other. Chile has offered duty concessions on about 1798 goods including agri-items, chemicals, pharmaceuticals, textiles, iron and steel items, to Indian exporters as compared to 178 items earlier. The tariff lines with Margin of Preference (MoP) offered by Chile will range from 30 per cent -100 per cent.
On the other hand, India has offered concessions to Chile on 1031 products including vegetable oil, processed food, pharma, plastic and pearls as against 296 earlier. An official release said, around 96 per cent of the total bilateral trade has bow been covered by this agreement. The expanded PTA would immensely benefit both sides as a wide array of concessions has been offered by the two countries on a number of products which will facilitate more trade. The tariff lines with Margin of Preference (MoP) offered by India will range from 10 per cent-100 per cent.
Key facts of the expanded Preferential Trade Agreement (PTA)
• These tariff lines were based on HS 2012 when the negotiations had been concluded.
• With the implementation of the HS 2017 Nomenclature with effect from 1 January 2017, both sides have aligned their Annexes on India’s Schedule of Tariff Concessions, Chile’s Schedule of Tariff Concessions and the Schedule on Rules of Origin as per HS 2017 Nomenclature for the issue of Notification.
• This would facilitate exporters of both sides to take the advantage of tariff concessions as per the expanded PTA immediately which covers around 96 per cent of bilateral trade.
India and Chile Trade relations
After Brazil, Venezuela and Argentina, Chile is the fourth largest trading partner of India in LAC (Latin America and the Caribbean) region. The Department of Commerce statistics says that India’s bilateral trade with Chile has grown substantially to reach a level of US$ 3646.45 million during 2014-15 as compared to US$ 2655.35 million in 2011-12.
On the other hand, the bilateral trade in 2015-16 went down by (-) 27.60 per cent and stood at US$ 2639.99 million with exports US$ 679.32 million and imports US$ 1960.67 million. The statistic says extraneous reasons like fall in prices of crude oil and international commodities was one of the reasons behind the decline of the bilateral trade between the two nations.
The Ministry of Commerce & Industry release says, “Keeping in view that Chile is the founding member of the Pacific Alliance to which India is an Observer Member implementing the expanded PTA could deepen its engagement with the emerging trade bloc”.