ASEAN-India Target Trade to Reach US$100 Billion By 2015
80 percent of goods tariffs to disappear by 2016
Feb. 17 – Anand Sharma, India’s Minister of Commerce, has stated that he expects ASEAN-India trade to top $100 billion by 2015, speaking at the ASEAN-India Commemorative Summit, an event that celebrated 20 years of cooperation between ASEAN and India and that was marked by New Delhi and ASEAN concluding negotiations for FTAs in services and investments.
“This represents a valuable milestone in our relationship. I am confident it will boost our economic ties in much the same way the FTA in goods has done,” Prime Minister Manmohan Singh said of the two new FTAs.
It is anticipated that the ASEAN-India amendment will have completed necessary legislative procedures by the first quarter of 2013 allowing for the agreement to be formally signed in August 2013. Notably, the new agreement will liberalize conditions for individuals undertaking foreign contracts, and will be particularly beneficial for Indian and the Philippines given their sizable outsourcing industries. The new agreement builds upon the existing free trade pact, which under a phased approach will eliminate tariffs on 80 percent of goods by December 31, 2016.
The expansion of ASEAN-India trade is still dwarfed by ASEAN’s trade with other economic partners, most notably China. Last year ASEAN-China two way trade grew 23.9 percent to US$362.85 billion. By contrast, Sino-Indian trade in 2011 reached US$73.9 billion, albeit representing a 20 percent increase from 2011.
However, the dynamics of the trilateral ASEAN-China-India relationship could change in the years ahead, as both ASEAN nations and India grow increasingly wary of China’s rising power. New Delhi has indicated that it may seek to use growing apprehension towards Beijing among its neighbors as a means of more fully implementing its “Look East” policy. This has included steadily strengthening relations with Japan in recent years, as well as entering into a joint oil exploration contract with Vietnam for oil blocks in the South China Sea. Indeed, Prime Minister Singh has suggested that Delhi views the ASEAN FTAs as both strategic and economic developments.
“We see our partnership with ASEAN not merely as a reaffirmation of ties with neighboring countries or as an instrument of economic development, but also as an integral part of our vision of a stable, secure and prosperous Asia and its surrounding Indian Ocean and Pacific regions,” Singh said.