Johannesburg: Negotiators from India and the Southern African Customs Union (Sacu) are finalising request lists of products to benefit from lower trade tariffs. An agreement could lead to increased trade between South Africa, by far the largest member of Sacu, and India. The lengthy negotiations for a preferential trade agreement were given new impetus following a state visit by President Jacob Zuma to India in June. Such agreements allow countries to negotiate lower import duties, giving them a competitive advantage over exporters without such contracts.
Indian exporters pay lower tariffs than their South African counterparts. While 50% of India's exports to SA are subject to tariffs of less than 10%, 55% of SA exports to India are taxed at more than 20%, according to consultant Frontier Advisory.
Vikram Doraiswami, India's consul-general in South Africa, said India's "idea is not to have an excessively ambitious list" of products benefiting from lower tolls, but to begin at a level that all parties found comfortable to set the ball rolling with an initial agreement.
Doraiswami would not reveal the products under consideration, but SA is likely to ask for improved access for its wine and agricultural products, particularly fruit, while Indian exporters will want improved access for pharmaceuticals, vehicles and jewellery.
Trade between SA and India has increased significantly in recent years. Doraiswami said it was expected that the target of $10-billion in bilateral trade would be reached early this year, rather than 2012, as was originally envisioned.
The two countries hope to reach trade of $15-billion by 2014, up from around $3-billion in 2004.
SA's trade with India consists mainly of raw materials - coal, gold, aluminium and diamonds while India exports mainly value-added, manufactured products. Industries with potential for closer co-operation include agriculture, IT and communications, and independent electricity producers (IPPs).
Indian IPPs were keen on the South African market, Doraiswami said, but were waiting for legislation to be finalised. Many are already in neighbouring countries, such as Botswana, but SA offers a much bigger market.
Several Indian companies, including vehicle manufacturers Tata and Mahindra, and pharmaceutical companies Ranbaxy and Cipla, have major operations in SA. But local companies have struggled to create an equal base in India, partly because of restrictions on foreign owner-ship in various sectors in the Indian economy.
Doraiswami said corporate interest from both countries had picked up tremendously in the past year: his consulate dealt with about seven queries a day from companies from both countries looking to invest.
"The most fundamental challenge remains a lack of knowledge; a basic understanding of which opportunities exist in India. We have to try and find ways to expand the existing relationship by pointing people in the right direction," he said.