New Delhi, Aug. 13 As part of the Comprehensive Economic Cooperation Agreement (CECA), India and the 10-member Association of South East Asian Nations (ASEAN) today signed a free trade agreement (FTA) in goods in Bangkok.
The Union Minister of Commerce and Industry, Mr Anand Sharma, signed the ASEAN-India Free Trade Agreement in Goods with ASEAN economic Ministers. The FTA in goods will integrate the two globally important economic blocks for mutually beneficial economic gains.
Import tariff
Under the ASEAN-India FTA, the ASEAN member countries and India will lift import tariffs on more than 80 per cent of traded products between 2013 and 2016, starting from January 1, 2010.
Also, tariffs on sensitive goods will be reduced to 5 per cent in 2016, while tariffs will be maintained on up to 489 items of very sensitive products, the press statement said.
ASEAN is a major trading partner for India and accounts for about 10 per cent of its global trade. In the last financial year, bilateral trade between India and ASEAN was more than $40 billion. India and ASEAN have set an ambitious target of achieving bilateral trade of $50 billion by 2010. The current agreement which comes into force from January 1, 2010 would help achieve this target.
The agreement has provided flexibilities to India and ASEAN countries to exclude some of the products from tariff concessions or eliminations to address their respective domestic sensitivity. India, on its part, has excluded 489 items from the list of tariff concessions and 590 items from the list of tariff elimination to address sensitivities in agriculture, textiles, auto, chemicals, crude and refined palm oil, coffee, tea, pepper etc. ASEAN countries have also maintained similar exclusion list from the proposed tariff concessions or eliminations.
Bilateral trade
The exchange of tariff concessions between India and the ASEAN member countries would lead to growth in bilateral trade and investment resulting in economic benefits to India and the ASEAN member countries. Indian exporters of machinery and machine parts, steel and steel products, agriculture products such as oilcake, wheat and buffalo meat, auto components, chemicals and synthetic textiles would gain additional market access as a result of tariff liberalisation by ASEAN. Indian manufacturers would also be able to source products at competitive prices from the ASEAN countries.
The agreement also provides for bilateral safeguard mechanisms to address sudden surge in imports after the agreement comes into force. In such an eventuality if it hurts a domestic industry, safeguard measures including imposition of safeguard duties may be put in place for a period up to four years. The flexibility to invoke the safeguard measures will remain available for both the sides for a period of seven years to 15 years from the date, the agreement comes into force. The signing of the agreement signals India’s firm commitment to its ‘Look East’ policy of building upon its historical links with the countries of the Southeast Asian region and further deepening and widening this partnership.
India and ASEAN are currently negotiating Agreements on Trade in Services and Investment, which are to be concluded by December 2009. India looks forward to access the vast services market of ASEAN. India’s total trade in services was $ 137.50 billion in 2006. The corresponding figure for ASEAN is $ 280.90 billion. Similarly, Foreign Direct Investment (FDI) attracted by India in 2007-08 was $ 24.60 billion, whereas ASEAN member countries attracted FDI totalling $ 60.50 billion in 2007.
Source : Business Line