Prime Minister Manmohan Singh will take a call on the contentious issue of rules of origin, which has led to an impasse in the ongoing negotiations between India and Asean for a regional trade and investment area, which includes a free trade area in goods and services.
Senior government officials told Business Standard that the prime minister convened a meeting on the issue, which was attended by Finance Minister P Chidambaram, external affairs ministry officials, besides Commerce and Industry Minister Kamal Nath.
The need to take a view on the matter has also arisen as both countries are hoping to sign the protocol to implement the early harvest scheme during the third India-Asean summit to be held on November 30 at Vientiane in Laos, which is slated to be attended by the prime minister himself.
"We have been seeking a minimum 40 per cent value-addition norm along with change in tariff heading at the four-digit level. In addition to this, we had also sought minimum operation to ensure that some manufacturing activity is undertaken in the country of import. Asean, however, wants us to have only the 40 per cent value addition norm," an official said.
Officials pointed out that India was willing to make certain concessions like doing away with the requirement of minimum operation, as it would automatically be taken care of under the 40 per cent value addition and tariff heading clause.
"We have also indicated that we would be willing to relax the value addition norms and allow the value addition to be undertaken in any of the Asean member countries or even in India," an official said adding that the import of raw material would also be permitted from any Asean country.
According to officials, having just a value addition norm with other conditions could open the possibility of imports from other countries like China coming into India and taking advantage of the FTA.
Asean has a membership of 10 countries, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Phillippines, Singapore, Thailand and Vietnam.
As per the framework agreement, negotiations for an FTA in goods is expected to commence from January 2005 to be concluded by June 30, 2005, while the negotiation for FTA in services would commence in 2005 and conclude by 2007.
The prime minister had earlier this year reviewed India's policy towards free trade and preferential trade agreements to ensure that these policies do not adversely impact the interest of domestic companies.