Nisha Taneja, Saon Ray, Devjit Roy Chowdhury and Neetika Kaushal
Commencement: February 2010
Completion: December 2010
Funded by: Konrad-Adenauer-Stiftung, 11 months
A major shortcoming of the SAFTA Agreement is that members continue to maintain a large number of items under the sensitive list. The tariff liberalisation programme under SAFTA requires members to review and reduce their sensitive lists every four years or earlier. However, there is no formal binding or commitment; any review is purely voluntary in nature. As a result, no significant effort has been made by countries to prune their lists. Keeping this in view, the study attempts to examine India’s sensitive list maintained with SAARC members and suggests an approach to prune the list. The concept of revealed comparative advantage has been used to pair the RCAs for products on India’s sensitive list with the corresponding RCAs of the SAARC countries. Four categories of items are generated, based on whether India or the SAARC country is competitive in each of the items. This process helps in identifying items in which India is competitive and those where the exporting SAARC country is not competitive. Such items are recommended for removal from India’s sensitive list. Items that are vulnerable to competition include those items where the exporting country is competitive but India is not. The study recommends that only these vulnerable items should be retained on the sensitive list but should be removed gradually in a phased manner.