India-ASEAN Services and Investments FTA Finalized
Jan. 18 – India and the Association of Southeast Asian Nations (ASEAN) finalized their anticipated free trade agreement (FTA) in services and investments on December 20, 2012 during the India-ASEAN Commemorative Summit in New Delhi, India. The move is likely to boost trade to US$100 billion by 2015. Trade between India and ASEAN presently stands at US$80 billion.
Indian Prime Minister Manmohan Singh stated that the implementation of the FTA in goods (which was concluded in 2010) between ASEAN and India has caused trade to grow by 41 percent in 2011-2012. Naturally, the FTA in services and investments was the next logical step to take in encouraging economic prosperity between India and ASEAN.
“Two-way flows in investments have also grown rapidly to reach US$43 billion over the past decade. As ASEAN investments into India have multiplied, ASEAN countries too have emerged as major destinations for Indian companies. From energy resources to farm products, from materials to machinery, and from electronics to information technology, Indian and ASEAN companies are forging new partnerships of trade and investment,’’ Singh further remarked.
Indonesian Trade Minister Gita Wirjawan added, “[the FTA] will be a game-changer for the nature of economic relations between the two zones.”
Anupam Srivastava, managing director of Invest India, echoed Wirjawan’s statement.
“Value-added growth will soon begin to take place and, given its potential in areas as diversified as palm oil and rajma beans, pharmaceuticals and engineering goods, this is a win-win situation for both sides,” Srivastava said.
Besides the FTA with ASEAN, India had been steadily negotiating similar bilateral agreements with member states of the organization (currently Indonesia and Thailand), and has already implemented similar FTAs with Singapore and Malaysia.
Prior to the finalization of the agreement, India had demanded that ASEAN open up its service sector further. However, India agreed to drop its request for independent professional services and, as a trade-off, ASEAN dropped its request for prudential measures in financial services.
Each ASEAN member state is expected to finalize the legal documents for the pact on services and investments by February 2013.
ASEAN also invited India to join in with Australia, China, Japan, South Korea and New Zealand on their discussions regarding a regional comprehensive economic partnership (RCEP) to be held next year. The RCEP will form a regional partnership agreement that will build on the existing FTAs between all six countries and ASEAN.