"FTA brings macro benefits for the country but with some micro pains for certain sections which have to be dealt with cautiously", according to Minister of State for Commerce Jairam Ramesh.

What is needed is a balanced approach keeping in mind long-term competitive edge in those sensitive sectors, he added.

Ramesh, however, made it clear that certain decisions cannot be only economic as FTAs are being viewed as an instrument of political influence and as a means of signaling to the world that India has undergone a change.

"We cannot import sensitive items very substantially", he told the Forum of Financial Writers here adding it was regrettable that a country like India imports 45 percent of its edible oil requirement.

Had the technology mission on edible oil, started in 1987-88, been pursued, India would by now have attained self-sufficiency in edible oil, Ramesh said.

Asked about the objections raised by Indian Agriculture Ministry on the India-Asean FTA, he said discussions were on but India would have to be "extraordinarily careful" while negotiating the accord.

The need for a cautious approach by India to FTAs has also be suggested by a study undertaken by the Tariff Commission on Rules of Origin of products while deciding eligibility for concessional tariffs.

The study also suggests setting up of an effective monitoring and control system for Rules of Origin of goods and the process of consultation and review between India and FTA partner country should be built into the agreement itself or under Rules of Origin.

Official sources said India has decided to undertake a comprehensive review of all such FTAs with individual countries or trading blocs, keeping in mind sensitivities of vulnerable sections like domestic farmers and textile industries. Even those FTAs, which are already on negotiation table would come under scanner, they added.

The decision assumes significance in view of the Agriculture Ministry's strong objections to inclusion of sensitive farm products like pepper, rubber, palm oil, tea and coffee in the trade liberalization programme.

Intervening in the matter, Prime Minister Manmohan Singh has asked Commerce and Agriculture Ministries to hold consultations on Tariff Rate Quota (TRQ) approach for sensitive products in FTA with Asean.

The TRQ is a specific quota offered to a country for exports at a fixed duty which is lower than the importing country's normal duty.

Implementation of India-Asean FTA has already been delayed by more than a year with both sides dropping early harvest scheme and the new date for implementation is January 1, 2007.

According to Indian agriculture ministry, since sensitive products form a part of its list of Special Products in the World Trade Organization, zero tariffs on them are not acceptable.

Rising imports of pepper, rubber and palm oil from Sri Lanka under the India-Sri Lanka FTA has already had its impact on the domestic sector in these areas which comprise small growers and manufacturers, industry sources point out.

At the same time, if these items are not included in FTA, the objective of such an agreement, which worked on the principle of all trade meaning at least 80 percent of trade, would be defeated, officials said.

The Asean wants India to keep these items out of sensitive list. A country like Malaysia, which is a major exporter of palm oil to India, contends that if these commodities are put on sensitive list, then single product exporting countries like it will not meet the criterion of "all trade".

India has already made concessions with regard to Rules of Origin as far as Asean is concerned by agreeing to 35 percent value addition and change in tariff sub-heading level.

It is estimated that Asean stands gain more from FTA with India with export potential of countries like Malaysia, Indonesia, Thailand, Singapore and the Philippines projected at $10.2 billion to start with as against benefit potential for India at around $2.7 billion.

This fact has been brought by a joint study by the Indian Institute of Foreign Trade and Malaysian Institute of Economic Research.

India has FTAs with Thailand, Sri Lanka and a Comprehensive Economic Cooperation Agreement (CECA) with Singapore which is FTA-plus because it includes services. New Delhi is in talks with Mauritius for CECA and with South Korea for Comprehensive Economic Partnership Agreement, which also goes beyond FTA by including services, and liberalised trade with Russia, Gulf Cooperation Council and China.