The Confederation of Indian Pharmaceutical Industry (CIPI) has expressed its concern over the proposed Free Trade Agreement (FTA) between India and China which is at the conceptual stage. The confederation will soon submit a representation to the union commerce ministry asking it to re-consider the issue as they fear that such an agreement with China will ruin the Indian pharma industry due to the stiff competition from the cheap Chinese products.
It has been reported that the Indian government in an attempt to improve its relation with China is contemplating over having an FTA with China. Technically, a free trade agreement helps to reduce the export and import barriers between countries so that trade can grow as a result of specialisation, division of labour, and most importantly via comparative advantage. It works by eliminating tariffs, quotas and preferences on most of the goods and services traded between them.
However, T S Jaishankar, chairman, CIPI warns that in this case instead of being complementary, the trade agreement will only cripple the Indian industry. “Such a trade agreement will only be beneficial for the Chinese people and not for the Indian industry. If this agreement comes into force, both import and export between India and China will become free which will allow Chinese to dump its cheap raw materials in India thus killing the Indian competitors.”
Moreover, he pointed out that unlike the Chinese, for an Indian company to get access to the Chinese market is more difficult. Even though India is good with finished goods, exporting them to China will be a tough task since their regulations are more stringent than India's.
Jaishankar informed that they have asked the CIPI Delhi office to inquire on this matter so that they can share their opinion with the centre as soon as possible. “Even though this matter is not yet finalised and is just in the speculative stage we do not want to take any chances. If this comes into force it will only be a one way agreement with losses to the Indian side.”
It is expected that once CIPI gets some definitive information on this matter they will submit a memorandum to the government to re-consider its views on FTA with China.