New Delhi, Feb 20 (KNN) The Global Trade Research Initiative (GTRI) has advised India to exercise caution in pursuing a potential free trade agreement with Qatar, particularly regarding the petrochemical sector where both nations maintain strong market positions.
The economic think tank issued this guidance on Wednesday following high-level diplomatic discussions between the two countries.
Prime Minister Narendra Modi and Qatar’s Amir Sheikh Tamim bin Hamad Al-Thani recently discussed the possibility of establishing a bilateral Comprehensive Economic Partnership Agreement (CEPA).
The proposed agreement aims to double bilateral trade to USD 28 billion by 2030, according to the joint statement released after their meeting.
Typical CEPA arrangements involve substantial reduction or elimination of customs duties on 90-95 percent of traded goods, alongside measures to facilitate services trade and investment.
GTRI Founder Ajay Srivastava emphasised that India’s well-established domestic petrochemical industry could face significant challenges if tariff reductions lead to increased competition from Qatari imports.
The existing trade relationship already shows a marked imbalance, with India’s imports from Qatar reaching USD 12.34 billion in 2023-24, while exports remained at just USD 1.7 billion.
The trade composition reveals that 85 percent of India’s imports from Qatar consist of energy products, including USD 6.3 billion in LNG, USD 3.1 billion in butane and propane for LPG production, and USD 1.1 billion in petroleum crude.
In contrast, India’s primary exports to Qatar include more modest amounts of Basmati rice, iron and steel articles, and machinery.
Recent data indicates a decline in bilateral trade from USD 18.77 billion in 2022-23 to USD 14 billion in 2023-24. Qatar, with a GDP of USD 221.4 billion and a population of 3.1 million, has invested USD 1.5 billion in India through foreign direct investment between April 2000 and September 2024.
As a member of the Gulf Cooperation Council alongside Bahrain, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates, Qatar maintains its position as India’s largest supplier of LNG and LPG.
The GTRI’s analysis suggests that careful evaluation of sectoral impacts, particularly in energy and manufacturing, will be crucial before proceeding with the agreement.
The think tank emphasises the importance of ensuring that any tariff concessions on petrochemicals and energy-related imports are structured to protect domestic industries while pursuing enhanced trade relations.
(KNN Bureau)
