India and the ASEAN member states signed a free trade agreement (FTA) on August 13 in Bangkok, after six years of negotiations to reach a deal. The agreement will come into force on January 1, 2010.
Under the FTA, import tariffs will gradually be lifted on both sides from 2013 to 2016 on over 80% of traded products, including machinery, steel, agricultural products, chemicals, and textiles. The agreement will also allow Indian manufacturers to source products from ASEAN countries at competitive prices. However, some 489 “sensitive” products will remain subject to tariffs.
Concerns over a sudden surge in imports after the FTA comes into force have been addressed by including in the agreement the right for either side to impose safeguard duties for a period of up to four years; that right will be available to both parties for between seven and 15 years after January 1, 2010.
Based on figures for India’s 2007/08 financial year, the ASEAN bloc was India’s fourth largest trading partner after the European Union, the United States, and China. Trade between India and the ASEAN bloc was valued at around USD40bn in the same period.
After the signing ceremony, India’s Minister of Commerce and Industry, Shri Anand Sharma, declared the signing of the FTA as “a historic development given the increasing engagement between India and ASEAN countries” and that the agreement would “definitely … open new opportunities” between the two parties. He also said India and ASEAN would be looking to reach a similar agreement for services.
An ASEAN press statement gives conservative estimates that trade between its member states and India could rise to USD60bn within a few years.
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