New Delhi, Apr 5: India should be cautious while signing free trade agreements (FTAs), especially with China as it could affect the interest of domestic industry, a report released by industry chamber Assocham said today.

According to the report titled 'India's FTAs and the Indian Industry', India Inc should be taken into confidence before the government went ahead with FTA with China.

"Preferential Trade Agreement (PTA) should first be concluded before FTAs are finalised to protect interests of Indian Inc. Trade and comprehensive economic agreements have been signed in the past with various countries and regional blocks that have resulted into a few fallacies and hurt economic interest of domestic industry," Assocham President Venugopal Dhoot said while releasing the report here.

He said the mistake should not be repeated in case of the proposed FTA with China.

"Since India's tariff levels are much higher than China, any reduction in tariff will open the floodgate of cheaper imports from China. Also, a large share of Singapore's exports is in form of re-exports of the products from other countries," he added.

"The high tariff regime in India at about 12.5 per cent and low tariff regime of China of less than 6 per cent, and FTA between India and China might affect the economic efficiency between these countries as they would exclude and discriminate other counties," Dhoot said.

This discrimination will work against India because of high tariff barriers. When India gives duty free access to China, tariff revenue previously collected on import from China turns into export revenues for export firm from China.

In the process, Chinese firms will gain more compared to Indian exporters as Indian exporting firms have less to gain from the tariff free access in China, he said.