Ficci: India could grow its Asean trade by US$26bn this year
Anil Wadhwa of the Ministry of External Affairs has also called for a closer relationship between India and southeast Asia.
A free trade agreement was signed between India and Asean 2009, which translated into a significant increase in bilateral trade to now make the region India’s fourth-largest trade partner - though India is only the bloc's seventh-largest partner. The combined GDP of Asean and India has been estimated at US$2.4tr.
The deal is seeing tariff liberalisation of over 90% of products traded between southeast Asia and the subcontinent, including so-called “special products,” such as crude and refined palm oil, coffee, black tea and pepper. Tariffs on over 4,000 product lines across a number of industries will be eliminated by 2016, at the earliest.
Positive developmental impact
Asean countries are largely export-driven, whereas India ships much of its foods overseas. The equality and quantity of trade have been well below their true potential and India hopes that the FTA will become more equitable when the time comes for its review.
Wadhwa said: “Our growing relations with Asean and the larger Asia-Pacific neighourhood have the potential of bring about a significant positive developmental impact on India’s northeastern region.
“Being the land bridge to Asean, the northeast was a natural partner in India’s ‘Act East Policy’, especially with respect to the connectivity agenda.”
A Trade in Services Agreement is awaiting ratification in July, while negotiations for a comprehensive economic partnership across the region are expected to be completed by the end of the year. The conclusion of these agreements will go a long way in boosting bilateral trade and investments.
Increased focus on SE Asia
In the recent Union Budget, the government announced that it would encourage more Indian private-sector investment in Cambodia, Laos, Myanmar and Vietnam through a project development company.
The Federation of Indian Chambers of Commerce and Industry (Ficci) has called on the government to aim to increase trade between India and Asean to US$100bn this year, and US$200bn by 2020.
Ficci’s president, Dr Jyotsna Suri, said agreements between the two had the potential to “change the regional architecture and bring us a step closer to realising the dream of the ‘Asian Century’.”