India-MERCOSUR preferential trade agreement comes into effect

04 Jun 2009

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A preferential trade agreement between India and the South American economic block MERCOSUR has come into effect on 1 June. Under the PTA India and MERCOSUR will give tariff concessions raging from 10 per cent to 100 per cent  to each other.

The MERCOSUR block includes Argentina, Brazil, Paraguay, and Uruguay, who have  combined GDP of $467 billion and the largest market in the region - twice that of the Canadian market.

Total trade between India and the MERCOSUR block stood at $4773.39 million during the financial year 2007-08. India's  exports to the MERCOSUR stood at $2904.8 million during 2007-08, while imports stood at about $1,868.39 million during the same period.

The major product groups covered in the offer are food preparations, organic chemicals, pharmaceuticals, essential oils, plastics and articles thereof, rubber and rubber products, tools and implements, machinery items, electrical machinery and equipments.

The break-up of the number of tariff lines for different MOPs is: - 10 per cent on 393 tariff lines, 20 per cent on 45 tariff lines and 100 per cent on 14 tariff lines.

India will offer preferential treatment to import of meat and meat products, inorganic chemicals, organic chemicals, dyes and pigments, raw hides and skins, leather articles, wool, cotton yarn, glass and glassware, articles of iron and steel, machinery items, electrical machinery and equipments, optical, photographic and cinematographic apparatus.

The break-up of the number of tariff lines for different margin of preferences (MOP) is: 10 per cent on 93 tariff lines, 20 per cent on 336 tariff lines and 100 per cent on 21 tariff lines.

MERCOSUR, which groups Argentina, Brazil, Paraguay and Uruguay, was formed in 1991 with the objective of free movement of goods, services, capital and people and became a customs union in January 1995.

India and MERCOSUR signed a framework agreement on 17 June 2003 at Asuncion, Paraguay with the aim of creating conditions and mechanisms for negotiations in the first stage, by granting reciprocal tariff preferences and in the second stage, to negotiate a free trade area between the two parties.

As a follow up to the said framework agreement, a preferential trade agreement between India and MERCOSUR was signed in New Delhi on 25 January 2004 and five annexes to this agreement were signed incorporated on 19 March 2005. By this, India and MERCOSUR have agreed to give tariff concessions ranging from 10 per cent to 100 per cent to each other on 450 and 452 tariff lines respectively.

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