Indian industry opposes Indo-Gulf FTA

15-Sep-06

The proposed free trade agreement (FTA) between India and the Gulf Cooperation Council (GCC) has hit a roadblock with the Indian industry, especially the petrochemical sector, opposing the agreement. The petrochemical sector wants items produced by it to be put on the sensitive or negative list so that it is not subjected to tariff reduction commitments under the FTA. Certain members of GCC are not agreeable to keep petrochemicals out of FTA. Members of the GCC include Oman, Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. GCC has emerged as India's important trading partner with the two-way trade touching $16bn last year. The Indian petrochemical industry is against the FTA because of the belief that GCC countries have comparative cost advantage due to access to very cheap fuel. Expansion plans of the production capacities in Gulf countries make the petrochemical industry in GCC even more competitive and are an additional threat.