India and Association of South East Asian Nations (ASEAN) had signed a free Trade Agreement on 2009 August 13 in the meeting of ASEAN-India Economic Ministers held in Bangkok, Thailand. Both parties signed the pact on trade in goods under the Comprehensive Economic Cooperation Agreement (CECA). The CECA was signed in 2003 in recognizing the economic potential for close linkages between the two parties. Through the treaty the parties had agreed to enter into negotiations in order to establish an ASEAN-India Regional Trade and Investment Area (RTIA), which includes a Free Trade Area (FTA) in goods, services and investment, and to strengthen and enhance economic cooperation.
This treaty has been framed after years long negotiations and discussions started after the First India-ASEAN summit in 2002. The setting up of a FTA aims at tariff free trade between the trade bloc and India. This trade agreement has taken effect from January 1, 2010 onwards. One of the important trade treaties signed by India so far, this treaty aimed at the regional cooperation between the two important growing economic powers of Asia. But, In India the signing of the agreement has gained wide protest from various parts of the country. So the treaty has been widely discussed following the framing of agreement. Certain sources have claimed that the free trade which would be established would be having a negative effect over the country’s domestic market.
The volume of trade between India and ASEAN countries has shown considerable growth since 2000. The total trade volume has increased from 7 billion US dollars during 2000-’01 to 45.3 billion US dollars during 2008-’09. The signing up of the framework agreement was helpful for this increase. By the end of 2010 the total trade volume is targeted to reach 50 billion US dollars. The signing up of a free trade agreement will break the barriers of trade and will help to increase the volume of trade between two blocks. This will constitute to the development of the region.
Agreement on export of services sector will be gainful to India. India currently ranks 9th in export of services globally and ASEAN countries is a net importer of the same. This advantage will help to gain more market and eventually contribute more to the GDP. Another important field India has advantage is the Investment sector. Indian companies seek direct investment in the ASEAN countries through the agreement. Currently Singapore is one of the top destinations for Indian overseas investment. The secure environment and economic developments in some countries are motivating factor for investment. The top Indian companies are aiming to invest in IT, infrastructure, banking, automotives, and mining and real estate sectors of ASEAN countries mainly in Singapore, Malaysia, Thailand and Indonesia. Through the agreement Indian investors can seek more opportunities in Philippines, Cambodia, Laos and Vietnam which has shown considerable growth in development. Indian products of machinery and machine parts, steel and steel products, Certain Agricultural products like wheat, oil cake and meat, chemicals and textiles would gain additional market access as a result of tariff liberalization.
Currently India is having good trade relations with Singapore, Malaysia and Indonesia only. A major chunk of India’s trade with ASEAN is to these countries. Singapore is heading with 32 % of total trade while Indonesia (27%) and Malaysia (18%) follow. By the FTA, India can increase the trade with other seven countries of ASEAN.
No comments:
Post a Comment