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A158 EXCISE LAW TIMES [ Vol. 372

inter-sectoral linkages, a further process of greater economic activity in other
sectors is unleashed because of backward and forward linkages of the firms that
take advantage of an FTA, thus creating a virtuous economic cycle whereby em-
ployment generation and demand creation in other linked sectors yield an over-
all developmental outcome.”
It is clear from the above that the importance of FTA is also significant to the suc-
cess of domestic manufacturing industry. The HLAG has also recognized the
profound significance of imports impacting the overall economic growth of the
country. However, certain dark areas are also there in the FTA architecture
which are required to be addressed in an appropriate manner. Few problems
with the existing FTAs as identified are as follows :
 Widening of India’s trade deficit with FTA partners.
 Absence of quality norms for import of certain products from
ASEAN countries resulting in import and consumption of cheap
products at the cost of domestic sector.
 Rules of Origin related concerns on certain tariff lines as a serious
constraint faced by the exporters.
It is also observed that identifying hurdles is most important aspect to
tap the potential of the trade deriving out of FTAs. India cannot remain isolated
from the external economic dynamism and must play a pro-active role in setting
agenda of trade and economic cooperation with other countries. Tariff reduc-
tion/elimination is an important part of the strategy but that alone will not be
enough. India must implement an extensive plan on scientific regulations based
on international standards. This will enable access to partner markets and protect
domestic industry from cheap imports. There are enough safeguard available under
the FTAs. The trade remedies and safeguards, however, must be used only when there is
sufficient scientifically arrived economic proofs.
The various aspect of the cross-border transactions have been studied by
the HLAG in order to identify the essentials in making FTAs to be a successful
vehicle. The relevant extract of observation of HLAG is given below :
“For any FTAs to be successful in real sense, commitment and convergence, not
just in the Department of Commerce but across all other departments relevant
for the purpose, besides other non-government stakeholders, particularly
the industry, are essential. Even the State Governments also need to be
fully on board…….”
It can be said that the aforesaid report of HLAG has possibly contributed
in formulating the policy for the cross-border trade that has been partly reflected
in this year budget proposals, however, acting only on the restrictive front may
not achieve the intended purpose and goal of the Government of making India a
global economic superpower. It may be noted that the new customs provisions as
envisaged above casting obligations on importer may generate disturbances in
the trade since these are beyond the control of importers. Moreover, the denial of
concessional Customs duty benefit available under FTAs to the importers, may
turnout to a regressive step and may have to face judicial scrutiny in the coming
days.
[Continued on page A176]

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