31/7/06 (TIMES NEWS NETWORK[ )   -  NEW DELHI: In an effort to put the derailed free trade agreement talks with the Asean back on track, India is considering a gradual reduction in import duties on palm oil for Asean members with the rider that duty cuts should take place after a five-year period.

The commerce ministry is discussing the proposal with the agriculture ministry and the government is yet to take a formal decision on the issue. The agriculture ministry’s view on the suggestion would be crucial as it had been firmly opposing the Asean’s demand that India should exclude palm oil from the negative list of items which are kept out of the purview of the FTA.

Speaking to ET, commerce ministry officials said that it would be impossible for India to cut import duties on palm oil (currently at 80%) without giving adjustment time to domestic producers.

“We feel that five years time is the least that the domestic industry needs before it is prepared to take on additional competition. Some in the government may even think that five years is not enough and the industry needs more protection. We will discuss the idea over the next couple of weeks,” an official said.

Malaysia and Indonesia-two important members of the Asean and major producers of palm oil-are keen that India should eliminate import duties on the product. Malaysia has gone to the extent of declaring that the FTA talks are over as India has refused to open its market to the extent desirable.

India, which had initially proposed to keep 1,500 items out of the purview of the FTA, had gradually reduced the length of the negative list to 852 items. Most of the items in the negative list are agriculture products where India has limited flexibility. The Asean, however, wants India to prune its list to 60 items, which is impossible for India to keep. Since palm oil is the main commodity of interest for the Asean, India feels that by offering certain concessions here the impasse may be resolved.

Indian commerce minister Kamal Nath is scheduled to meet his Asean counterparts during the Asean economic minister’s conference on August 24. He would take up the issue of the stalled FTA talks in the meeting and would place fresh proposals, if any, on the table.

The Prime Minister’s trade and economic committee will meet before the Asean meet to discuss if India could offer further concessions to the Asean.