I. Trade with Asia

(A) South East Asia

East Asia and ASEAN - General

India's trade with East Asia and the ASEAN region comprising the ASEAN countries (viz. Indonesia, Malaysia, Singapore, Thailand, Philippines, Brunei, Vietnam, Myanmar, Laos and Cambodia), Australia, New Zealand and countries of Oceania stood at US$ 27.58 billion during the year 2005-06, registering a growth of 28.99 per cent over the previous year. Traditionally, India has an adverse balance of trade in the region. Major destinations for India's exports in the region are Singapore, Indonesia, Malaysia, Thailand, Australia and Vietnam Socialist Republic. The major sources of imports are Australia, Indonesia, Malaysia, Singapore, Thailand and Myanmar. Exports to the ASEAN region grew by 23.56 per cent during the year 2005-06 over the previous year and imports witnessed a growth of 19.41 per cent in the same period. As regards the East Asian region, the comparable figures were 16.83 per cent and 30.38 per cent respectively. During the period April - October, 2006, exports to ASEAN region grew by 29.46 per cent over the corresponding period of the previous year.

Major Items of Export & Import

The principal commodities of export include petroleum products, oil meal, gem and jewellery, electronic goods, cotton yarn/readymade garments, cotton, machinery & instruments, primary/semi-finished iron & steel, transport equipment, marine products, drugs/pharmaceuticals, inorganic/organic/ agro chemicals, dyes/intermediates etc. The major commodities imported from this region are coal/coke/briquettes, gold, vegetable oils, electronic goods, organic chemicals, machinery except electrical machinery, professional instruments, wood and wood products, non-ferrous metals, metalifers ores and metal scrap, raw wool etc.Trade Promotion Activities

India has Joint Trade Committees with New Zealand, Myanmar and Thailand; a Joint Working Group on Trade with Philippines; a Joint Working Group on Energy and Minerals and also a Joint Business Group on Textiles & Natural Fibers with Australia. In addition, there is a Joint Commission with Australia at the Ministerial level. A Trade and Economic Framework (TEF) Agreement have also been signed with Australia for enhancing bilateral trade and investment on a comprehensive basis.

India has Joint Business Councils (JBCs), established at the business level, with Singapore, New Zealand, Australia, Malaysia, Indonesia, Thailand, Vietnam and Philippines. Meetings of JBCs are held between the business communities of both sides to discuss a wide range of issues of mutual interest for expansion of bilateral trade. Such meetings also act as fora for businessmen to mutually interact and explore the potential for growth in trade and investment relations.

Engagements with ASEAN and South-East Asian countries

With a view to address the economic content of the 'Look East Policy', a continuous dialogue is maintained with ASEAN and the countries of South-East Asia. Summit level engagements, Ministerial meetings and official level discussions are held in order to fulfill the "Look East Policy" agenda. India participated in the ASEAN Summit interactions and East Asia Summit interactions held in Cebu, Philippines between 11th and 15th January 2007. Matters having overall bearing on the economy of the Asian region were discussed and this provides further opportunities for us to widen and deepen our economic presence in the region.

Negotiations for conclusion of the Comprehensive Economic Cooperation Agreement with ASEAN are well under way. Both sides have shown flexibility to conclude the agreement as early as possible and against this backdrop, three meetings of India-ASEAN Trade Negotiating Committee were held during the year. During the Summit at Cebu, both sides decided that the ASEAN-India FTA (AI-FTA) negotiations might be targeted to be concluded by July 2007. Both sides also reached an agreement on the size of Negative List to be maintained by both sides, which will be 490 products with a trade value cap of 5 per cent.

Discussions with a number of visiting ASEAN and East Asian dignitaries were held during the year. These interactions provided useful directions for addressing the various issues involved in enhancement of trade and investment relations.

During the year, a meeting of the India-Australia Joint Commission was held at New Delhi on 27-28 February 2007 and both sides discussed the possibilities of widening and deepening our bilateral trade and cooperation.

(B) North East Asia

India's trade with the North East Asian region comprising of China, Japan, Republic of Korea, Hong Kong, Taiwan, Democratic People Republic of Korea, Macao and Mongolia stood at Rs.169834.08 crore during 2005-2006, registering a growth of 26 per cent over the previous year. Exports to the North East Asia region were of the order of Rs.71403.44 crore during 2005-2006, registering a growth of 20 per cent over the previous year. Imports from the region amounted to Rs.98430.64 crore during 2005-2006, registering a growth of about 31 per cent over the previous year. India's major trading partners in the region are Japan, Hong Kong, China and Republic of Korea.
As per the data available for April-October 2006, the trade with NEA countries was of the order of Rs. 126113.54 crore, registering a growth of about 34.89 over the corresponding period of last year. The balance of trade was negative to the tune of Rs.34599.00 crore as against Rs. 17258.66 crore during 2005-06. During April

Trade with North East Asian Countries

 

Year	Exports	Imports	Total Trade	Balance of Trade
2002-03	38056.30	37765.83	75822.13	(+)290.48
2003-04	43135.28	54296.03	97431.31	(-)11160.75
2004-05	59413.61	74917.08	134330.69	(-)15503.47
2005-06	71403.44	98430.64	169834.08	(-)27027.20
2005-06(Apr-Oct)	38114.28	55372.94	93487.22	(-)17258.66
2006-07(Apr-Oct)(P)	45757.27	80356.27	126113.54	(-)34599.00

October 2006, exports to the region increased to Rs. 45757.27 crore from Rs. 38114.28 crore in the corresponding period of last year while imports from the region increased to Rs. 80356.27 crore from Rs. 55372.94 during the same period.

Major items of export to North East Asian countries are gems and jewellery, iron ore, primary and semi-finished iron & steel, plastic and linoleum products, cotton yarn, fabric made ups and marine products. Major imports from this region include electronic goods, machinery, organic chemicals, pearls, precious and semi-precious stones, coal, coke, briquettes, iron & steel and transport equipment.

Trade with China has already crossed US$ 17.4 billion during 2005-06. It may be mentioned that during the visit of Chinese President to the Republic of India in November, 2006, it was agreed that both countries will endeavour to raise the volume of bilateral trade to US$ 40 billion by 2010. Major items of Indian exports to China are iron ore, primary and semi-finished iron & steel, plastic & linoleum products, processed minerals, inorganic/organic/agro chemicals, minerals and ores, drugs, pharmaceutical and fine chemicals. Major imports from China include electronic goods, coal, coke, briquettes, organic chemicals, machinery and medicinal & pharmaceuticals products.

Indian exports to Japan registered a growth of 13.85 per cent while imports from Japan registered a growth of 8.20 per cent during 2005-06 over 2004-05. Major items of export to Japan include gems and jewellery, marine products, iron ore, petroleum - crude & products and oil meals. Major items of import from Japan are machinery, electronic goods, transport equipment, iron and steel, professional instruments and organic chemicals.

Indian exports to Hong Kong during 2005-06 amounted to Rs. 19733.61 crore registering a growth of 18.96 per cent. Imports from Hong Kong amounted to Rs. 9596.67 crore, depicting an increase of 23.45 per cent. Exports to Hong Kong account for about 4 per cent of India's overall exports. The major items of exports to Hong Kong are gems and jewellery, finished leather, electronic goods, cotton yarn fabrics made ups, plastic & linoleum products and petroleum: crude & products. The share of gems and jewellery in India's exports to Hong Kong is about 75 per cent. The major items of imports from Hong Kong are pearls, precious & semi-precious stones, electronic goods, gold and cotton yarn & fabrics.

Indian exports to Republic of Korea during 2005-06 amounted to Rs. 8053.16 crore registering an increase of 72.06 per cent. Imports from Korea during 2005-06 amounted to Rs. 19229.68 crore registering a growth of 21.97 per cent. Major items of exports to Korea are petroleum products, cotton yarn, fabrics, made ups, oil meals, minerals & ores, iron ore, primary and semi-finished iron & steel, non-ferrous metals, and drugs, pharmaceuticals & fine chemicals. Major items of imports from Korea are electronic goods, machinery, transport equipment and iron and steel.

India and Korea CEPA Negotiations

In pursuance to the recommendation of the JSG, a Joint Task Force has been constituted to negotiate the terms of a Comprehensive Economic Partnership Agreement between the two countries. The JTF has had five meetings and has made considerable progress in finalising the text of the agreement. There has been general agreement on the modalities of tariff concessions for trade in goods, and talks are progressing for arriving at a concsensus on Trade in Services, Investment, Rules of Origin, Customs Cooperation and Bilateral Cooperation in other areas. The negotiations are likely to conclude by the end of 2007.

India and Japan EPA/CEPA Negotiations

During the visit of the Prime MinisterDr. Manmohan Singh to Japan in December 2006, it was decided to launch negotiations for conducting an Economic Partnership Agreement/Comprehensive Economic Partnership Agreement (EPA/CEPA). A JTF has been constituted for this purpose headed by Deputy Minister of Foreign Affairs, Japan, and the Commerce Secretary, Government of India as Chief delegates. The first meeting of the JTF was held from January 31 to February 2, 2007 in New Delhi. The terms of reference for negotiations were agreed upon in this meeting. Constitution of working/expert groups were also discussed. The second round of negotiations is scheduled to be held in April 2007.

In order to widen and deepen economic engagement, the Prime Minister of India and Japan also announced an "India-Japan Special Economic Partnership Initiative" (SEPI) during the visit of the Indian Prime Minister to Japan. This initiative will promote enhancement of investment from Japan to India and help develop India's infrastructure and manufacturing capacity, taking full advantage of the ample availability of skill and human resources and the public-private partnership policy initiative of the Government of India.

MOUs for establishment of "Delhi-Mumbai Industrial Corridor" and to raise the Japan India Policy Dialogue to Ministerial level were also signed between the Indian Commerce and Industry Minister and Minister for Economy, Trade & Industry of Japan.

India-China Joint Task Force (JTF) for RTA Feasibility

This Joint Task Force has been constituted to study the feasibility of and the benefits that may derive from a possible China-India Regional Trade Agreement. During the visit of the Chinese President during November 20-23, 2006, it was agreed that India and China will endeavour to raise the volume of bilateral trade to US$ 40 billion by 2010. It was also agreed that the JTF will finalise its report by October 2007.

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Hon'ble Commerce & Industry Minister's meeting with the Chinese Premier

(C) South Asia and SAARC

The South Asia region comprises of India, Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. India's bilateral trade relations with these countries are discussed below:

Afghanistan

The Preferential Trade Agreement signed on March 6, 2003 in New Delhi would remain in force till either party gives to the other a notice for its termination. Under the Agreement, India has granted preferential tariff for 38 products from Afghanistan including raisins, dry fruit, fresh fruits and spices whereas Afghanistan granted preferential tariff to 8 items from India including tea, antisera and medicines, refined sugar, cement clinkers and white cement.

Trade with Afghanistan

Bangladesh

The validity of the Bilateral Trade Agreement signed on 4.10.1980 has been extended from time to time. The current agreement will be valid till 31.03.2009. This Agreement provides for expansion of trade and economic cooperation, making mutually beneficial arrangement for the use of waterways, railways and roadways, passage of goods between two places in one country through the territory of the other, exchange of business and trade delegations and consultations to review the working of the Agreement at least once a year.The fourth meeting of the Joint Working Group on trade between India and Bangladesh was held on 5-6 July, 2006 in Agartala, Tripura wherein the para-tariff and non-tariff barriers to bilateral trade were discussed.

Bhutan

The Bilateral Trade Agreement between India and Bhutan is regulated by an Agreement on Trade, Commerce and Transit signed between the two countries. The current Agreement was signed in New Delhi on 28.07.2006 and will be in force for a period of ten years with effect from 29.7.2006. Under this Agreement India also provides transit facilities to landlocked Bhutan to facilitate its trade with third countries and movement of goods from one part of Bhutan to another through Indian Territory. The requirements of Bhutan are mainly met by imports from India. Commercial transactions are carried out in Indian Rupees and Bhutanese Ngultrum.

Maldives

Bilateral Trade Agreement signed on 31st March, 1981 will progressively remain in force until it is modified or terminated by either country by giving three months` notice to the other. The Agreement provides for Most Favoured Nation (MFN) treatment to each other in trade and merchant vessels, promotion of commercial and technical cooperation through exchange of delegations and participation in trade fairs and exhibitions and supply of essential commodities by Government of India to Government of Maldives on annual quota. All payments between India and Maldives are in freely convertible currency, subject to their foreign exchange regulations.


Nepal

The Treaty of Trade signed by the two countries has been renewed from time to time. The five-year validity of the current Treaty will expire on 5.3.2007. The process for its renewal beyond that has commenced. Under this Treaty, both countries give duty-free facility without any quantity restriction for primary products from each other which do not require any value addition. On a non-reciprocal basis, India gives duty-free facility, without any quantity restriction, to goods manufactured in Nepal subject to fulfilling the prescribed twin criteria of 30 per cent value addition and four digit tariff head change. However, duty-free facility is restricted to annual quotas on four sensitive items from Nepal, namely, vanaspati, copper products, acrylic yarn and zinc oxide. The transaction for bilateral trade is in domestic currency. Nepal, however, permits payments in US dollars for few items from India.

Both countries have also signed a Treaty of Transit under which India provides transit facilities to Nepal for its trade with third countries. Fifteen entry/exit points have been designated for this purpose. The seven year validity of this Treaty has been extended from time to time. The current Treaty was renewed in January 2006 for a further period of seven years, up to 5.1.2013.

Apart from the above treaties, both countries have also signed an Agreement of Cooperation to control unauthorized trade between the two countries. The current Agreement is due for renewal for a further five year period with effect from 06.03.2007.

Pakistan

India and Pakistan have no formal trade agreement. India granted MFN status to Pakistan but Pakistan is yet to reciprocate. Pakistan has so far maintained a list of importable items from India, called Positive List, as notified from time to time. For the present, the Government of Pakistan has expanded this list from 773 to 1075 items. Both countries have set up a Joint Study Group (JSG) at Commerce Secretary Level for adopting a strategy to boost trade and economic cooperation between the two countries. The JSG has since met twice (in February 2005 at New Delhi and on 27 March 2006 at Islamabad). Apart from JSG, discussions on trade and economic cooperation are also held within the frame work of Composite Dialogue between the two countries. The third round of talks was held in Islamabad on 28-29 March, 2006.

Sri Lanka

Sri Lanka has traditionally been an important export market for India and is the second largest importer of Indian goods in the region after Bangladesh. A Free Trade Agreement was signed on 28th December, 1998, which has been in operation since 1st March, 2000. Under this Agreement, both countries agreed to phase out trade tariffs from each other within a fixed time frame except for those items in the Negative List of each other. India has completed the tariff liberalization by reducing tariffs to zero percent in March, 2003 while Sri Lanka would complete its tariff liberalization by 2008. The items in the Negative Lists are those where protection to local industry is considered necessary. Vanaspati is not in the Negative List of India under the Free Trade Agreement. However, keeping in view the interest of the domestic industry, import of vanaspati

including margarine and bakery shortening has been restricted to 2.5 lakh metric tones per year. Both countries have also agreed to enter into negotiations for a Comprehensive Economic Partnership Agreement based on the recommendations of the Joint Study Group and bilateral negotiations in this regard are going on.

SAARC

The seven countries of South Asia namely, India, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka have organized themselves and established an9. India, Pakistan and Sri Lanka are categorized as Non-Least Developed Contracting States (NLDCSs) and Bangladesh, Bhutan, Maldives and Nepal are categorized as Least Developed Contracting States (LDCSs).

The SAARC Preferential Trading Arrangement (SAPTA) was singed by the seven countries during the Seventh SAARC Summit held in Dhaka in April, 1993. The Agreement provides a framework for exchange of tariff concessions and also for liberalization in para-tariff and non-tariff concession measures with a view to promoting trade and economic cooperation among the SAARC member countries. Since the establishment of SAPTA, four rounds of negotiations were held and tariff concessions exchanged on a large number of items.

The Agreement on South Asian Free Trade Area (SAFTA) was signed during the Twelfth SAARC Summit held at Islamabad in January 2004 which has come into force from 1st January 2006. SAFTA, inter alia, prescribes a phased Tariff Liberalization Programme (TLP) according to which all the member states would reduce their existing tariffs to zero to five percent within ten years of the agreement coming into force. This TLP would cover all tariff lines except those items kept in the Negative List by each country. The TLP for the first two years was completed by 31.12.2006. All the member states have accordingly notified SAFTA tariff concessions except Pakistan for India. With the SAFTA Agreement coming into force, there would be no more negotiations under SAPTA. The SAPTA concessions would be available till the completion of TLP irrespective of whether the products are included in the sensitive lists or not.

II. Trade with North America Free Trade Agreement (NAFTA)

The North America Free Trade Agreement (NAFTA) was signed in 1994. It is a free trade area among the United States of America, Canada and Mexico. It is the largest and the most important trading block of the world. India's bilateral trade with the countries of NAFTA region is given below:

(A) India-US Bilateral Trade

The USA is India's largest trading partner and foremost export destination. At present, it accounts for 16.83 per cent of India's exports and around 6.34 per cent of India's imports. India accounts for only around 0.75 per cent of the USA's total exports and imports.

Growth of India's exports to the US during2005-06 registered a growth of 26.06 per cent over the previous year while India's imports from USA registered a growth of 35.04 per

Trade with SAARC Countries

(US$ million)

Trade with USA

(US$ million)

cent over the previous year. There is a huge untapped potential to increase bilateral trade. During the periodApril-October 2006, India's exports to the USA were US$ 10985.17 million registering a positive growth of 12.57 per cent over the corresponding period of the previous year. During the same period, India's imports from the USA were US$ 5935.16 million registering a growth of 30.17 per cent over the corresponding period of the previous year. The major items of Indian exports to the USA are gems & jewellery, readymade garments & cotton including accessories, machinery and instruments, manufactures of metals and cotton yarn, fabrics, made ups, etc. The major imports items from the USA to India are electronic goods, machinery except electrical & electronic, other commodities, transport equipments and fertilizers manufactured.

Foreign Direct Investment Approvals (as on October, 2006)

The USA ranks second and accounted for about 13.94 per cent (US$ 5497.56 million) of the total FDI approvals of US$ 44981 million accorded during the last 15 years. The leading sectors attracting FDI from the USA are fuels (power & oil refinery), telecommunications, electrical equipments, food processing industries and services.

Prospects in Trade

Considering the size of the USA's import market, there is an immense scope for expanding our export base. In light of China's performance in the US market, it is felt that it should be possible for India to raise its market share from 1 per cent to 2 per cent in the US market over the next three years with the right medium term strategy.

India-US Commercial Dialogue

During the visit of the US President to India, a document titled "India-US Relations: A Vision for the 21st Century" was released by the Prime Minister of India and the President of United States of America on 21st March, 2006 at New Delhi. To implement the Indo-US Commercial Dialogue envisaged in that document, the India-United States Commercial Dialogue was signed on 23.3.2000 at New Delhi. Interactions under this Dialogue have been taking place from time to time to sort out concerns of both countries on bilateral issues. These include video conferences held from time to time on the trade areas covered under different focus groups e.g. Intellectual Property Rights, Agricultural Biotech & Food Safety Regulations and on Standards. The validity of this Commercial Dialogue has since been extended up to 23.03.2008.

India-U.S. Trade Policy Forum

The India-US Trade Policy Forum was announced during the visit of Prime Minister Dr. Manmohan Singh to the US in July, 2005. The Trade Policy Forum is a part of the overall economic dialogue between India and the United States and is designed to expand bilateral trade and investment relations between India and the United States. The Forum had its first meeting in New Delhi on November 12, 2005 wherein issues relating to Tariff and Non-Tariff Barriers; Agriculture; Investment; Services; Intellectual Property and the Doha Round were discussed. A review meeting of the Focus Groups was held in Washington on 16-17 February, 2006 when both sides discussed issues relating to Innovation & Creativity on IPR, Investment, Agriculture, Tariff & Non-Tariff Barriers and Services. The third meeting of the Trade Policy Forum was held on 1st March, 2006 which was co-chaired by Commerce & Industry Minister & United States Trade Representative Ambassador Rob Portman. The preparatory meeting to the fourth meeting of the Trade PolicyForum was held on May 30, 2006 in New Delhi and the fourth meeting was held on 21 & 22 June, 2006 in Washington. An abbreviated India-US Trade Policy Forum Meeting was also held on November 28, 2006 to take up some selected issues from both the countries.

(B) India-Canada Bilateral Trade

At present, India's exports to Canada account for 0.99 per cent of India's global exports and India's imports from Canada account for 0.62 per cent of India's total imports.

India's exports to Canada during 2005-06 registered a growth of 17.86 per cent over the previous year while India's imports from Canada during the same period registered a growth of 18.58 per cent. During the period April-October 2006, India's exports to Canada reached a level of US$ 657.13 million registering a positive growth of 15.08 per cent over the corresponding period of the previous year. During the sameperiod, India's imports from Canada were US$ 731.86 million registering a growth of 30.87 per cent over the corresponding period of the previous year. The major commodities of exports to Canada are RMG cotton including accessories, drugs, pharmaceuticals & fine chemicals, manufactures of metals, machinery and instruments and gems & jewellery. The major commodities of imports from Canada are newsprint, machinery except electrical & electronic, pulses, transport equipments and non-ferrous metals.

The thrust areas for increasing India's exports to Canada are: leather and leather goods, gems and jewellery, sports goods, chemicals and pharmaceuticals, processed food (both agriculture and marine), engineering goods, auto parts and ancillaries, computer software packages etc.

Trade with Canada

(US$ million)

Trade with Mexico

(US$ million)

(C) India-Mexico Bilateral Trade

The growth in trade between Mexico and India has been inhibited by several factors such asdistance, difference of language, inadequate knowledge of the systems and procedures followed in the country, etc. In spite of constraints, India's trade has grown consistently at a good pace over the years.

India's exports to Mexico during 2005-06 registered a growth of 20.21 per cent over the previous year while India's imports from Mexico during the same period registered a growth of 18.14 per cent. During the period April-October, 2006, India's exports to Mexico reached US$ 301.06 million registering a positive growth of 25.26 per cent over the corresponding period of the previous year. During the same period, India's import from Mexico reached US$ 378.51 million registering a growth of 613.63 per cent over the corresponding period of the previous year. The major items of exports to Mexico are transport equipments, drugs, pharmaceuticals & fine chemicals, RMG cotton including accessories, manufactures of metals and inorganic/organic/agro chemicals. The major items of imports from Mexico are petroleum, crude & products, electronic goods, metalifers ores & metal scrap, etc. except electronic and organic chemicals.

The potential sectors of mutual interest are knowledge-based industres viz. IT, software, drugs and pharmaceuticals, biotechnology, new chemicals, tourism and textiles.

Measures undertaken for Export Promotion to NAFTA

Dissemination of trade related information with respect to NAFTA partners is coordinated with the Apex Chambers of Commerce/EPCs. Emphasis is laid on the identified important sectors for expansion and consolidation of our trade. The analyzed trade data of NAFTAcountries is regularly passed onto the Apex Chambers of Commerce and Export Promotion Councils for dissemination among their member exporters, who are also provided assistance for promoting exports, participation in fairs/exhibitions, identification of export products and potential market areas for exports, details of reputed buyers etc. The difficulties faced by the exporters in NAFTA countries are regularly taken up with the concerned authorities in these countries and the issues are resolved through correspondence, video conferencing and bilateral meetings. The various legislations/steps taken by these countries and the possible impact of these measures on Indian exports are analyzed regularly and follow up action is taken in consultation with other Ministries/Departments and our Missions abroad.

III. Trade with Europe

European countries account for about 20 per cent of India's total trade. The bilateral trade between India and Europe during the last five years is given below:

Trade with Europe

(US$ million)

During 2005-06, bilateral trade showed an increase of 21 per cent. While India's exports to Europe recorded a growth of 23 per cent, India's imports from Europe witnessed a growth of28 per cent. The top five items of India's exports to Europe are ready-made garments & cotton including accessories, gems & jewellery, machinery & instruments, petroleum (crude & products) and transport equipments. The top five items of India's imports from Europe are machinery (except electrical & electronics), pearls/precious/semi-precious stones, electronic goods, transport equipments and iron & steel.

Hon'ble Commerce & Industry Minister and the Commission of Trade, European Union at a Joint Press Conferencein New Delhi on 17th November 2006

(A) Trade with European Union Countries

The European Union (EU) presently consists of 27 countries viz. Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, UK, Bulgaria and Romania.

Foreign Direct Investment (FDI) approved from European Union countries during August 1991 to September 2006 was of the order of US$ 17.71billion. The actual inflow of FDI during the same period was US$ 8.32 billion. The top sectors attracting FDI and technology transfer from EU are fuels (power & oil refinery), telecommunications, transportation industries, chemicals (other than fertilizers) and services sector. So far, 3713 technical collaborations have been approved for EU countries. UK, Netherlands, France and Italy are the top EU countries from where FDI has been approved during the above-mentioned period.

India and the EU countries have enjoyed healthy economic relations. These relations have been built on the foundations of (i) India-EU Cooperation Agreement on Partnership and Development which came in to effect in August, 1994 and (ii) India-EU Strategic Partnership Agreement. India also has bilateral framework Agreements with a number of individual EU countries in areas of trade, investment and avoidance of double taxation. India has agreements for investment promotion/protectionwith 22 countries of Europe, including 17 countries of EU. Similarly, agreements for avoidance of double taxation exist with 26 countries of Europe, including 20 countries in EU. An Agreement on Economic Cooperation between India and Romania was signed on 23rd October 2006.

Hanover Fair 2006, one of the biggest engineering exhibitions in the world, was held in Germany in April 2006. India was the partner country for this edition of the Fair. The Fair was jointly inaugurated by the Prime Minister of India and German Chancellor. India's participation was co-organized by the Engineering Export Promotion Council (EEPC) and India Brand Equity Foundation (IBEF).

The 7th India-EU Summit and the Business Summit was held in Helsinki on 13th October 2006 under the co-chairmanship of Prime Minister of India and the Finnish Prime Ministewho currently holds the Presidency of the European Union. The Summit encouraged an expansion and deepening of trade and investment linkages and adopted the report and recommendations of the High Level Trade Group (HLTG) set up under the India-EU Joint Action Plan during the 6th India-EU Summit held in New Delhi on 7th September 2005. The Summit endorsed the case made for a future broad-based bilateral trade & investment agreement and agreed that both sides move towards negotiations for such an agreement.

Hon'ble Chancellor of the Federal Republic of Germany and Hon'ble Prime Minister of India jointly inauguratedthe India Pavilion at Hannover Fair 2006

In addition to the traditional sectors of textiles, leather, gems & jewellery, etc., the current focus in bilateral trade includes sunrise sectors of pharmaceuticals, processed food, information technology and services sector. Cooperation in science & technology, biotechnology, space, information technology & communication etc., also finds a firm place in the bilateral economic partnership.

The institutional framework for reviewing the India-EU bilateral relations is the India-EC Joint Commission, which had its last meeting in September 2006. Three Sub-Commissions on Trade, Economic Cooperation and Development Cooperation and nine Joint Working Groups on agriculture/marine products, textiles, information technology & communications, consular matters, environment, steel, food processing industries, pharmaceuticals & bio-technology and technical barriers to trade (TBT)/sanitary and phyto sanitary (SPS) issues are functioning and submitted their reports to the Joint Commission. The meetings of Sub-Commission on Economic Cooperation and Sub-Commission on Development Cooperation were held in June 2006. The Sub-Commission on Trade met in July, 2006.

Notwithstanding the cooperation framework existing with the countries of European Union, Health/Sanitary & Phyto Sanitary Standards, Complex System of Quota/Tariff, Packaging & Labeling Requirements, Preferential Trading Arrangements, Use of Anti-Dumping/Anti-Subsidy Investigations against Indian products/goods, etc., have a bearing upon India's trade with EU. The Indian products affected are textiles, marine products, meat, milk/egg, floriculture, mushroom, sugar, rice, whisky, etc. These issues are constantly taken up with the EU and its member States. The Indian trade and industry also need to meet the quality and standard requirements of the European trading community.
Acontinuous dialogue is maintained with the EU and member countries at the Government and industry level to address different aspects of economic relations. Market access issues are regularly monitored and taken up with the European Union and its member countries.

In order to strengthen the trade and investment relations with the non-EU member countries in Europe, an India-European Free Trade Association (EFTA) Study Group was established in December 2006 to explore the possibilities of a broad based bilateral Trade and Investment Agreement between India and EFTA countries. EFTA comprises Switzerland, Liechtenstein, Norway and Iceland.

(B) Trade with Commonwealth of Indepen-dent States (CIS)

The Commonwealth of Independent States (CIS) comprise of the Russian Federation, Armenia, Azerbaijan, Belarus, Georgia, Moldova,Ukraine, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan (the last 5 countries jointly referred to as the Central Asian Republics). The bilateral trade with these countries is shown in the graph given below:

Trade with CIS Countries during April-October 2006

The CIS region had a share of 1.20 per cent in Indian exports and 2.03 per cent in Indian imports during 2005-06. The principal commodities of exports to the region include drugs and pharmaceuticals & fine chemicals, coffee, transport equipments, machinery and instrument, tea, tobacco, cotton yarn fabric, readymade garment cotton including accessories, electronic goods etc. The important items of imports to India from this region are iron and steel, fertilizers, non-ferrous metals, silver, newsprint, synthetic, reclaimed rubber etc.

Bilateral framework agreements on trade and economic cooperation have already been concluded with all the countries except with Azerbaijan. The process of finalising the Agreement for setting up the Inter-Governmental Commission (IGC) with Azerbaijan is in the final stages.

Russian Federation

• The Russian Federation, constituting a major portion of the former USSR, continues to be India's most important trading partner in the region. The Bilateral Framework Agreement on Trade and Economic Cooperation with the Russian Federation signed on 22nd May, 1992, provides that all transactions between the two countries would be undertaken in hard currency unless otherwise specified by inter-governmental agreements. During the year 2006-07, the following meetings were held to discuss various matters concerning bilateral cooperation:
• The first and second meetings of the Indo-Russian Joint Study Group were held in August and November 2006 respectively.l The 12th Session of Indo-Russian Working Group on Trade and Economic Cooperation (WGTEC) was held at New Delhi, India in November 2006.
• Under the aegis of the Indo- Russian WGTEC, the 12th Meeting of the Sub-Group on Banking and Financial Matters was held at Moscow, Russia in October 2006.
• Indo-Russian Forum on Trade and Investment has been set up between India and Russia under the co-chairmanship of the Minister of Commerce & Industry of the Republic of India and Minister of Economic Development and Trade of the Russian Federation. The objective of the Forum is to promote Business to Business interaction for enhancing trade and investment cooperation between the two countries. The first meeting of the Indo-Russian Forum on Trade and Investment was held on 12-13 February 2007 in New Delhi.

Central Asian Republics

Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan constitute the five Central Asian Republics in the CIS region. For Inter-Governmental Commission (IGC) with Kyrgyzstan, Tajikistan and Uzbekistan, Department of Commerce is the nodal Department. During the year 2006-07, the following meetings were held:

• The first meeting of the Indo-Turkmenistan Inter-Governmental Commission was held in October 2006 for which Ministry of External Affairs is the nodal Ministry.The sixth session of the Indo-Kazakhstan Joint Commission on Trade, Economic, Scientific, Technical, Industrial and Cultural cooperation was held at Delhi in October 2006 for which Ministry of Petroluem and Natural Gas is the nodal Ministry.
• The third session of the Indo-Tajik Joint Commission on Trade, Economic, Scientific and Technical cooperation was held at Delhi on 31st July-1st August 2006.
• The sixth session of the Indo-Uzbekistan Inter-Governmental Commission (IGC) on Trade, Economic, Scientific and Technical cooperation was held at New Delhi on 7 - 8 March 2006.

Other CIS Countries

Other six CIS Countries are Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Ukraine is India's second largest trading partner in CIS region. During the year 2006-07, the following meetings were held:

• Third session of the Indo-Belarus Joint Commission on Trade, Economic, Scientific and Technical Cooperation was held at Minsk, Belarus in July 2006 for which Department of Industrial Policy and Promotion is the nodal Department.
• An Export Group from Ukraine visited India in February 2006 to discuss the India-Ukraine Joint Action Plan 2006-2007. Ministry of External Affairs is the coordinating Ministry.

Bilateral Visits

• H.E. Mr. G.O. Gref, Minister of Economic Development and Trade of the Russian Federation visited India in February 2006.
• Mr. Alisher Shaykhov, Minister of Foreign Economic Relations, Investments and Trade and the Co-Chairman of the Indo-Uzbekistan IGC of the Republic of Uzbekistan visited India in March 2006.
• Shri Kamal Nath, Minister of Commerce and Industry visited St.Petersburg, Russia to participate in the 10th St.Petersburg International Economic Forum in June 2006.
• Mr. Hakim H Soliev, Minister for Economy and Trade of the Republic of Tajikistan and the Co-Chairman of the Indo-Tajik Joint Commission visited India in July/August 2006.

Trade Promotion Activities

• A Memorandum of Understanding on Cooperation was signed between Ministry of Commerce and Industry, Government of India and Ministry of Economic Development and Trade of the Russian Federation in February, 2006.
• To facilitate bilateral trade with countries of this region, a Trilateral Transit Agreement between India, Iran and Turkmenistan was signed on transit of goods. This Agreement would reduce the time taken in shipment to these countries. Uzbekistan and Kyrgyzstan have also acceded to this agreement.
• An International Transit Agreement "North-South Transport Corridor" has been signed between India, Iran and the Russian Federation for movement of goods via Iran, Caspian Sea and Astrakhan to Russia. The Agreement facilitates a shorter route for trade with Iran, Russian Federation and beyond. The transit movement is expected to be better and faster and also cheaper and 20 percent less time consuming. In the 3rd meeting of the Co-ordination Council of the International Transit Agreement "North-South Transport Corridor" held at New Delhi in October 2005, Ukraine and Kyrgyzstan participated as observers. Three more countries of CIS region namely Kazakhstan,Belarus and Tajikistan have become members of the Agreement.
• "Focus: CIS Programme" launched in 2003-04 now covers all the 12 CIS countries, namely Russian Federation, Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan. The programme seeks to increase interaction between the business entities of the two regions by identifying areas of bilateral trade and investment. The focus is on major product groups/ services for raising India's exports to this region. The exports to the region are to be enhanced through combined efforts of various institutions of the Government of India, and various Trade Promotion Organizations. The main objective is to increase mutual direct interaction among businessmen.
• Reverse Conference of Commercial Representatives of Seven Indian Missions in eight countries of the CIS region namely Armenia (also covering Georgia), Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan was held in India in March 2006.
• There is a regular exchange of delegations with countries through participation in trade fairs of mutual interest and exchange of trade related information.
• Bilateral trade and economic cooperation between India and these countries is regularly reviewed through the meetings of Joint Commissions / Working Groups and Joint Business Councils.
• There is a regular interaction between the governments for enhancing bilateral trade and economic cooperation. For ensuring greater presence of Indian banks in Russia, State Bank of India along with the Canara Bank opened a Joint venture. Also the ICICI Bank Eurasia has started its operations in Russia .

IV. Trade with Countries in the West Asia & North Africa (WANA) Region

West Asia and North Africa (WANA) region comprises of 19 countries. These are (i) Gulf Cooperation Council (GCC) countries (i.e. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates), (ii) Other West Asian countries (i.e. Iran, Iraq, Israel, Jordan, Lebanon, Republic of Yemen and Syria) and (iii) North African countries (i.e. Algeria, Egypt, Libya, Morocco, Sudan and Tunisia).

The principal export products from India to this region comprise of gems & jewellery, manufactures of metals, machinery and instruments, non-ferrous metals, transport equipment, manmade yarn, cotton yarn, fabrics, made-ups, plastics & linoleum products, primary & semi-finished iron & steel, readymade garment cotton including accessories etc., drugs, pharmaceuticals & fine chemicals, basmati rice, transport equipments etc. Our principal imports from this region consist of petroleum (crude and products), pearls and precious/semi-precious stones, gold, inorganic chemicals, organic chemicals, metalliferrous ores, fertilizers manufactured, electronic goods, non-ferrous metals and metal scrap, artificial resins, plastic materials, fertilizers crude, iron & steel and transport equipment etc.

Trade with countries in the WANA region during 2005-06

During 2005-06, commodity exports to the WANA region from India touched the figure of US$ 16,646.11 million as against US$ 14,232.44 million during the previous year, reflecting a growth of 16.96 per cent. Non-oil imports from WANA countries during the year 2005-06 amounted to US$ 10,751.51 million as compared to US$ 9,526.51 million in the previous year, registering a growth of 12.86 per cent. The balance of commodity trade was in India's favour to the extent of US$ 5,894.60 million during 2005-06 against US$ 4,705.94 million during 2004-05, which shows an increase of 25.26per cent.

Commodity exports to the WANA region during 2005-06 were about 16 per cent of India's global exports valued at US$ 103090 million, as against about 17 per cent of India's global exports valued at US$ 83,535.94 million in the previous year. Non-oil imports from the WANA region amounted to about 7.51 per cent of the country's global imports valued at US$ 149166 million during the year 2005-06, as against a share of 8.54 per cent of the country's global imports valued at US$ 111,517 million recorded in the previous year.

During 2005-06, United Arab Emirates ranked first among the destinations for India's exports in the WANA region. Our commodity exports to that country amounted to US$ 8,592.78 million as compared to US$ 7,347.88 million during 2004-05, i.e. a growth of 16.94 per cent. The other major destinations include Saudi Arabia, Israel, Iran, Arab Republic of Egypt, Oman etc.

Note:

* excludes oil imports
** petroleum product imports of US$ 25,731.03 million during April-October, 2006
(Source: DGCI & S)

Analysis of trade with WANA countries during April -August 2006

The following table indicates the status of India's trade with countries in the WANA region during the current year i.e. 2006-07 (April -October).

Between April-October 2006, commodity exports to WANA countries registered a growth of 50.15 per cent, reaching a figure of US$ 13,459.95 million. During the same period, non-oil imports registered a growth of -18.65 per cent and amounted to US$ 5,243.98 million.

Institutional Arrangements

Issues pertaining to trade and economic cooperation between India and WANA countries are regularly reviewed through the bilateral Joint Commissions and Joint Committees. Business delegations to various countries in the WANA region were sponsored by the Apex trade bodies like CII, FICCI, FIEO, ASSOCHAM, etc. Joint Business Council (JBC) arrangements exist between FICCI on the Indian side and its counterpart organizations in WANA countries. CII has similar arrangements in the form of Joint Business Group (JBG).

Recent developments/initiatives in the field of trade and economic co-operation with countries in the WANA region

• India-Israel Cooperation: The two countries are in dialogue to finalize a Preferential Trade Agreement (PTA), Customs Cooperation, Mutual Recognition Agreements (MRAs) for items of both sides' export interest, early utilization of R&D funds, establishment of investment dialogue, liberalization of trade in services, joint websites, negotiations on bilateral shipping agreement, etc.
• FTA with GCC Countries: India is in the process of negotiating a Free Trade Agreement (FTA) with GCC. Trade in Services, Investment and general Economic Cooperation will also be synergized with the proposed FTA.
• Indo-Jordan Trade and Economic Joint Committee: The 8th Session of the Indo-Jordan Trade and Economic Joint Committee was held in New Delhi during 21-23 August, 2006. On reviewing the developments in Indo-Jordanian relations, both sides (a) expressed satisfaction at the progress achieved on issues highlighted by the last Joint Committee, (b) took note of the agreements signed between the private sector institutions, (c) appreciated the role played by the private sector in taking forward the agenda of economic cooperation between the two countries and agreed to encourage them further in this direction, (d) agreed to upgrade the level of the Indo-Jordan Trade and Economic Joint Committee in order to fully realize the potential for further growth in the bilateral trade relations, for which both sides would exchange proposals regarding structure of the Joint Committee, and (e) agreed to revise the Bilateral Trade and Economic Agreement signed in 1976 in light of economic and trade developments in recent years, for which suitable drafts would be exchanged between both the sides.
• India-Oman Joint Commission: The 5th Session of the India-Oman Joint Commission was held in New Delhi on 5th September, 2006. Both sides identified several areas of cooperation and partnership and the relevance of the India-GCC FTA was also highlighted and supported.
• Indo Egyptian Joint Commission: The Sub-Committee on Trade and Economic Cooperation, set up under the 5th Indo Egyptian Joint Commission, met in New Delhi on 13th December, 2006. Both sides emphasized the importance of regular meetings of the India Egypt Joint Business Group in order to identify areas of cooperation and to devise means to assist business persons from both countries in trade and investment. The MoU between the India Trade Promotion Organization and Egypt was recognized as an important means to promote bilateral trade and investment. Both sides exchanged information on the investment laws and explored the actual and potential opportunities existing and expected in the two countries.

V. Trade with Sub-Saharan African Countries

India's trade with countries in Sub-Saharan Africa (SSA) Region since 2002-03 is given below:

Trade with Sub-Saharan African Countries

(US$ million)

• Textiles including ready-made garments, carpets & handicrafts;
• Engineering products including computer software;
• Chemical products including drugs and pharmaceuticals.

• Indo-Argentine Joint Commission
• Indo-Argentine Joint Trade Committee
• Indo-Mexican Joint Commission
• Indo-Brazilian Commercial Council
• Indo-Cuban Joint Commission
• Indo-Cuban Trade Revival Committee
• Indo-Suriname Joint Commission
• Indo-Guyana Joint Commission
• Indo-Venezuela Joint Commission

• Banco Bradesco SA, Brazil - US$ 10 million
• Corporacion Andean de Fomento (CAF-Andean Development Coporation) for Bolivia, Colombia, Ecuador, Peru and Venezuela - US$ 10 million
• Banco Nacional De Comercio Exterior, S.N.C. (Bancomext), Mexico - US $ 10 million
• Bancoldex, Colombia - US$ 10 million
• Central American Bank for Economic Integration (CABEI) for Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua - US $ 10 million
• Republic Bank Limited, Trinidad & Tobago - US$ 8 million
• Uniao De Brasileros S.A. (Unibanco), Brazil - US$ 10 million
• Government of Suriname - US$ 16 million
• Government of Guyana - US$ 19 million

• Commerce Minister of Peru, Mr. Alfredo Ferrero visited India from June 5 to 7, 2006. During his visit, various bilateral trade opportunities and the possibility of a PTA between India and Peru were discussed
• Hon'ble Prime Minister of India visited Brazil from September 11-14, 2006. His discussions with President Luiz Inacio Lula da Silva of Brazil covered a wide range of issues, including ways and means of strengthening economic and commercial interaction between India and Brazil. Through the Joint Communiqué issued on the occasion, the two leaders resolved to create an enabling environment to deepen and diversify the growing commercial and economic interaction encompassing trade, investment and technology.
• A high-level business delegation comprising 47 members from CII, FICCI and ASSOCHAM participated in the First IBSA (India, Brazil, and South Africa) Business Summit held in Brasilia on September 12-13, 2006 wherein the issues relating to Agriculture, Food Processing, Pharmaceutical, Biotechnology, Infrastructure, Engineering, Energy, ICT, Automobile, Civil Aviation and Banking were discussed.l Through IBSA Declaration made by the heads of India, Brazil and South Africa on September 13th 2006, it was agreed that India-MERCOSUR PTA would be expanded by increasing the number of products covered and increasing the tariff concessions agreed by each side. A preliminary discussion to work out the modalities of the future negotiations was held at New Delhi during November 15 and 16, 2006 wherein India presented a wish list of 622 additional products. MERCOSUR had also presented its wish list in December 2006, which is being considered in consultation with all concerned.