Two big economies in BIMSTEC - India and Thailand - have become locked in a battle over the rules of origin (ROO) issue in talks on creating a free trade zone among member states, reports BSS.

The sources said a separate working group meeting on rules of origin is going to take place from March 10-12 in New Delhi to sort out the issues. It has become important to remove the snags in order to make progress in the overall deal making process, they said.

Official sources here, however, declined to accept it as a snag saying there are many complex issues that need to be sorted out in moving the process. But it is not fair to call it a snag, they said.

The sources said BIMSTEC free trade zone is scheduled to come into effect from July 1 this year and any slow down in negotiation at this stage may derail the launching timeline.

A trade negotiating committee is conducting the overall trade negotiation for the BIMSTEC free trade zone. Many working groups on important issues like customs, arbitration, rules of origin and negative products list are contributing to the work of the trade negotiating committee to seal the deal.

The sources said in view of the huge differences between the two majors - India and Thailand - on rules of origin issue, the trade negotiating committee has agreed this time to facilitate a separate meeting of the working group on the subject to sort out their interest.

The smaller economies like Bangladesh, Sri Lanka and Myanmar are just onlookers as the big two remained locked in over the issues. It will be an important factor in determining duty exemptions and tariff differentials on intra-regional trade under the emerging trade bloc.

The sources said the trade negotiating committee would be meeting in early April to move the overall negotiation to its final goal. However, much of it will depend on the progress of the working group on the rules of origin, they said. "Let us hope for the best," said a source replying to a question if BIMSTEC free trade area is coming into effect from July 1.