‘Participating in WTO talks on GATS could be beneficial’

Our Economic Bureau

New Delhi, Jan 3: Shipping secretary MP Pinto has emphasised that India must participate in the ongoing World Trade Organisation negotiations on the general agreement on trade in services (GATS) in order to derive maximum economic benefits through international trade in services.

Mr Pinto was inaugurating a seminar on “WTO and its impact on consultancy and construction industry,” organised by Consulting Engineers Association of India here on Wednesday.

He reminded that WTO now comprises 144 members, including the recent addition of China and Taiwan into the body and that all of them are naturally trying to derive maximum advantages out of the GATs negotiations.

India’s negotiating team must therefore be well prepared and have in-depth understanding of the implications of the agreements arrived at in the GATs meetings, he added.

In his address, BK Zutshi, formerly India’s ambassador to GATT, said that construction services account for more than 5 per cent of the country’s gross domestic product with an employment potential of 1.2 million projected by the labour ministry and around 31 million estimated by the Construction Industry Development Council (CIDC). This discrepancy in employment estimates appears to be an issue of classification, he said, adding that the sector is a major contributor to employment generation and has also posted an impressive growth since the fifties—from a few companies to more than two lakh companies during 2001.

Mr Zutshi said that 71 members of the WTO had made commitments in the construction sector under commercial presence and movement of natural persons modes of supply under the GATs nomenclature.

Construction and engineering services were primarily graded through these modes. Commercial presence is essentially foreign direct investment in the sector including joint ventures and foreign presence.

India’s commitment in construction and related engineering services is confined to commercial presence mode with foreign equity ceiling of 51 per cent and the sector coverage limited to roads and bridges only, Mr Zutshi said and pointed out that it would have no impact on the sector.

Several papers presented at the seminar stressed the need to identify the barriers to national trade in services sector and to formulate a negotiating strategy to overcome them, besides encouraging India’s well developed software industry to boost exports and persuading the human resources development ministry to take immediate action to enact the proposed Engineers Bill.