Diplomatic and trade relations between India and Mauritius have been infused with new momentum, after a brief deterioration in February 2018, when President Ibrahim Mohamed Solih’s predecessor, Abdulla Yameen, imposed an emergency due to domestic political turmoil. President Solihis currently in India, for his first official overseas visit,after taking over as President in September 2018. During the Confederation of Indian Industry (CII)’s India-Maldives Business Forum, he invited the Indian business community to invest in his island country by assuring them that they will not face obstacles.
President Solih acclaimed India’s economic success post liberalization and hailed it as Mauritius’ closest friend and largest trading partner. He reiterated Maldives’ commitment to protect foreign investment by providing legal cover for foreign investors to grow their businesses. Moreover, as a fast-growing emerging economy, Mauritius is especially focused on developing its tourism industry and infrastructure, in terms of harbours, airports etc.
As per Suresh Prabhu, India’s Commerce and Industry Minister, India and Mauritius must explore avenues of cooperation across sectors like agri-products and services, fisheries etc. He expressed his desire to send a high-level delegation of officers to Mauritius to work out details for the same. Following President Solih’s talks with Prime Minister Modi and completion of the 7th round of negotiations, the free trade agreement is expected to be signed before or during the Mauritius Prime Minister Pravind Kumar Jugnauth’s visit to India in January 2019.
Negotiations over the India-Mauritius free trade agreement, officially known as the Comprehensive Economic Cooperation and Partnership Agreement (CECPA), started in 2006 but was suspended in 2013, due to a stalemate over the Double Tax Avoidance Agreement (DTAA). The DTAA waives the payment of capital gains tax by foreign investors in India. In 2017,disagreements were resolved by signing the DTAA.
Elements of the CECPA include economic cooperation and investments across goods and services but textiles and marine products remain tricky for India. Mauritian interests lie in India either eliminating or substantially reducing tariffs on these products, for it to broaden its scope for access to the Indian market in these two sectors. The domestic sector will possibly remain unaffected since Sri Lanka and Bangladesh also have zero duty access for multiple textile products in the Indian market.
India may not benefit much from Mauritius’ removal or reduction of duties because it is a small market providing tariffs on limited products like certain engineering goods, furnishings, bed linens and agricultural items including processed food. India will need to establish a strict conditionality of origin so that its domestic markets are not flooded with products not of Mauritian origin. More than goods, India is likely to benefit from the tourism and services sector, if the CCPA grants it concessions.
Countries including the US, Switzerland, Japan, Norway, Russia, Belarus and Kazakhstan offer Mauritius benefits under the Generalised System of Preferences, a preferential duty-free system that formally exempts specific developing countries from high tariff payments. Mauritius is also an FTA Member of the Common Market for Southern and Eastern Africa and the Southern African Development Community. Thus, if India and Mauritius sign a CECPA, Indian industries will be able to use Mauritius as a base with multiple countries under favourable trading terms and conditions.
At present, the bilateral trade between India and Mauritius is valued at USD 222.68 million with a surplus in favour of India. India has been the largest exporter of goods and services to Mauritius since 2007. At an increase of 22%, Indian exports to Mauritius crossed $1 billion and imports to India reached $20.6 million at a 12% increase. As per Indian central bank data, at USD 15.72 billion in 2016-17 and USD 13.4 billion in 2017-18, Mauritius is India’s top source of FDI.
Mauritian duty imposition is not more than 5%, so the economic gains for India from the agreement are limited. However, the free trade pact will be strategically crucial as through the CECPA, India will gain access primarily to French-speaking African markets. Moreover, as Mauritius benefits from India’s mammoth market, shared historical and cultural ties between both countries will also be strengthened.
India Outbound
December 18, 2018
source https://indiaoutbound.org/indo-mauritian-free-trade-agreement/
No comments:
Post a Comment