No FTA with China on cards

India on Thursday ruled out a Free Trade Agreement with China, until 'domestic distortions' like high taxes and poor infrastructure are corrected.

"There is no FTA with China on the cards. Period... we have to clean up most of our domestic distortions before thinking of an FTA," Minister of State for Commerce Jairam Ramesh told PTI in New Delhi.

Citing an example, Ramesh said India had a mean VAT rate of 12.5 per cent, whereas in China it was just half of it.

Such domestic distortions would have to be addressed before even thinking of an FTA with China, he added.

The two countries had set up a joint study group last year to explore the possibility of a bilateral trade pact.

The JSG had proposed a regional trade arrangement comprising trade in goods and services, investments, trade and investment promotion and facilitation and measures for promotion of economic cooperation.

But India is working on a Comprehensive Economic Partnership Agreement with Japan, he said.

Negotiations were going on for an FTA with the Association of South East Asian Nations and converting an FTA with Sri Lanka into a Comprehensive Economic Partnership Agreement.

That apart, tariff reductions under the South Asian Free Trade Agreement would come into effect from July this year.

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