· It is generally perceived that SSI in India are a protected sector. The protection to SSIs is just a rhetoric which exists on paper and in fact is a farce notion. It is said that import duties on SSI products are on higher slab. But the moot question is what is effective rate of protection? If all the four major raw materials of SSIs- Iron & Steel, Copper, Aluminium and Plastic raw materials are also put at highest slab of import duties, the actual protection is available to the large raw material manufacturers albeit in the name of SSIs. In fact in many cases for SSIs, the rate of protection is zero and even negative. The SSI sector is not worried about competition and does not clamour for protection, our greatest concern is about the inverted tariff structure.

Therefore, FISME is of the view GoI may agree to the request of Singapore for elimination of duty on the items requested, provided, GoI is agreeable to impose Single rate of duty of '0'% or a very low duty regime on all its tariff lines.

· Evidently, the stage of discussing the PTA/FTA with Singapore has already passed. But it is still not too late to question the desirability of judgement. While contemplating the PTA/FTA, the two key issues are extent of 'Trade Creation' and 'Trade Diversion'. In this light, the FTAs with ASEAN and Thailand are eminently sensible decision for India. There are a very few items where India & ASEAN countries are competing directly in world markets. There are excellent compatibilities and synergies besides a substantial size of market for trade expansion. But, a trading hub like Singapore?

Trade diversion through Singapore is a big issue even in ASEAN and is viewed an important intra-ASEAN trade distortion. Its laxity on rules of Origin is legendary. Approx. 50% of its current exports to India being the re-exports, one could only visualize the extent of trade diversion through Singapore with proposed PTA/FTA. Secondly, Singapore is a trading hub for East Asia. Unlike India, the tariff walls in East Asia are already very low and Indian exporters do not require Singapore as conduit for entry. What is there for us?

FISME is of the considered view that the popular and political appeal not withstanding, the proposed agreement does not bring any thing concrete for us on the table but only troubles. There is great scope of sectoral cooperation with Singapore e.g. in Services but signing FTA with Singapore is like inking FTA with China. Is GoI really serious ?

· It is rather perplexing that issues that scares us most at multilateral negotiations like WTO, are the very issues that we are ready to lap-up during the current FTA negotiations

· We dithered on sectoral duty elimination proposal at Cancun on seven sectors. But aren't we doing the same with ASEAN and in the same time frames? Same for non-trade issues. The ASEAN agenda is much more ambitious than what is being discussed at WTO. So why not have the same willingness at WTO which would ensure much greater access to markets.

In the FTA frenzy, what has been relegated to oblivion is how complex the 'Rules of Origin' are getting. These are potential NTBs for our own SME exporters. Barring expanded ASEAN (with China, Korea, Japan & India), there is a need for rethinking the FTA initiatives. Multilateral liberalization through WTO is still the best bet for us and the fact should never be let sight off.

List of items requested by singapore for duty elimination